Merz launches 500 billion euro financial package: pension reform before a decision!

Merz launches 500 billion euro financial package: pension reform before a decision!

The federal government is meeting today in the coalition committee in Berlin to discuss comprehensive measures to relieve the burden on the economy. Chancellor Merz announced that the first decisions should be made by the summer holidays. The meeting will discuss, among other things, better tax depreciation options for investments as well as measures to reduce bureaucracy and laws to implement a loan-financed special fund worth 500 billion euros. Merz expects the states to agree to the projects, which are urgently needed in view of the ongoing economic challenges.

Vice Chancellor and Finance Minister Lars Klingbeil promised noticeable changes for citizens and described the coalition as a “coalition of enablers”. The CSU chairman Söder also announced a comprehensive pension package, which includes a guaranteed pension amount of 48 percent of average income, the mother's pension, the active pension and the early start pension. The exact timing for the adoption of the pension package currently remains unclear, which leaves a certain amount of uncertainty in the political space.

Financial package and climate protection

Parallel to the discussions in the coalition committee, the Union, SPD and Greens reached an agreement on a financial package worth 500 billion euros ZDF reported. This package includes, among other things, 100 billion euros for the climate and transformation fund and was made possible through concessions on climate protection. The special fund is to be designed over a period of twelve years and stipulates that the federal states will receive 100 billion euros for municipal heat planning.

Another important point is the exclusion of the defense sector from the debt brake if expenditure exceeds 1% of gross domestic product. These expenses currently amount to around 45 billion euros. Furthermore, the countries are allowed to take on debts amounting to 0.35% of gross domestic product, which means an additional 16 billion euros for investments. According to Klingbeil, the money from the special fund should be used for additional investments as soon as they exceed 10% of the federal budget.

Criticism and next steps

Negotiations on the financial package dragged on into the night. While the coalition describes the agreement as a powerful boost for the country, the AfD criticizes it as the “biggest voter fraud in post-war history”. The Bundestag is due to decide next Tuesday on the comprehensive financial package, which is of central importance for both economic stability and climate protection.