Electricity price debacle: who wins and who loses in the new budget?

Electricity price debacle: who wins and who loses in the new budget?

The economic policy measures of the federal government under SPD leader Lars Klingbeil have met with mixed reactions. This particularly concerns the draft federal budget for 2025, which is of interest to many across the political spectrum. The Union is concerned about the negative effects of abandoning the finance ministry, while Klingbeil wants to use the budget funds specifically for social democratic projects. This leads to the Union's economic policy projects being pushed into the background, reports the FAZ.

The draft budget envisages net borrowing of 81.8 billion euros, which is 48.5 billion euros higher than last year. This additional spending is primarily due to the areas of defense and economic strategies known as “investment boosters”. According to that Deutschlandfunk The federal government plans to adopt a budget of 503 billion euros in 2025, which corresponds to an increase of 28.8 billion euros compared to 2024.

Investment package and tax relief

A central element of the draft is the investment package, which, however, postpones the tax rate reduction until the end of the legislative period. Initially, only companies that make new investments will benefit, but the pension legislation could impose greater burdens on the economy than relief. The Union is calling for more pressure for a competitive energy transition, and is also criticizing the implementation of the electricity tax reduction to the EU-wide minimum, which is not being implemented as announced.

• Sonderabschreibungen von bis zu 30% für Investitionen in Maschinen und Anlagen von 2025 bis 2027.
• Körperschaftssteuer soll ab 2028 um einen Prozentpunkt pro Jahr sinken (von 15% auf 10%).
• Sonderabschreibungen für Elektroautos von 75% im ersten Jahr, Rest im folgenden Jahr; Preisobergrenze von 75.000 Euro auf 100.000 Euro.
• Erhöhung der steuerlichen Zulagen für Forschung.

The federal government is also taking measures to reduce electricity prices by covering the network costs in the climate fund. However, there is criticism that this hides the actual costs of the energy transition. Private electricity consumers run the risk of being disadvantaged with this solution.

Public and political reactions

The federal government plans to compensate municipalities for tax reductions, which is met with resistance from some politicians. Overall, business will view the measures, particularly the reduction in corporate tax, positively. Nevertheless, there are calls for further structural reforms and a clearer course for sustainable economic development.

The outlook for the coming years remains characterized by increasing net borrowings and the challenges resulting from the implementation of these policy decisions. The Union is under pressure as debates rage over competing economic approaches and their long-term impact on the German economy.