Budget 2025: Financial experts warn of impending government crisis

Budget 2025: Financial experts warn of impending government crisis

According to a report by www.t-online.de, the current discussion is about setting the “baseline values” for the 2025 budget. Last year, the dispute over finances led to the procedure being suspended. With a view to the coming years, the situation is getting worse again, as the lines of conflict for next year are already beginning to emerge. Uncertainty about tax estimates, economic developments and interest rate developments contribute to an estimated gap of around 20 billion euros in the budget.

Expenditure for the current year is 476.8 billion euros, plus new loans amounting to around 39 billion euros. With great effort and long negotiations, the government was able to comply with the debt brake after the Constitutional Court prohibited the reallocation of extra funds. The agreement was the result of night meetings among government leaders.

The uncertainty and the estimated financial gap of around 20 billion euros pose a major challenge to the traffic light coalition. In addition, around 20 billion euros are still missing from the KTF, the climate and transformation fund, which leads to further discussions. The opposition fears that a possible increase in the CO₂ price could lead to higher costs for consumers.

As a financial expert, I see these developments as having potentially negative effects on the financial market and the economy. Uncertainty about government revenues and large financial gaps could lead to increased volatility in financial markets. There is also a risk that the planned spending cuts will lead to lower economic growth. Businesses could also hold back, which could lead to an overall decline in investment. It is important that the government acts quickly and transparently to maintain market and business confidence.