Budget with a question mark: the country is planning billions in additional spending

Created: 2022-07-27Updated: 2022-07-27 15:23

Winfried Kretschmann speaks at a government press conference in the state parliament.

© Bernd Weißbrod/dpa

Corona, inflation, lack of gas and possibly higher costs for refugees from Ukraine: The risks for the next state budget are great.

Although the Greens and the CDU have planned substantial investments, they are on the brink because of the "poly crisis".

Stuttgart - The coalition of Greens and CDU has agreed on substantial additional spending of almost 1.4 billion euros for the next budget, but there are big question marks behind the budget.

Because Prime Minister Winfried Kretschmann is preparing for a slump in the economy and tax revenues due to the consequences of the Ukraine war and the gas crisis.

"We expect that," said the Green politician on Wednesday to the SWR and the German Press Agency in Stuttgart.

"It can happen that way." In the event of a recession, the country would have to completely reorganize its budget.

"But that will be a completely different event."

Kretschmann wants to try to avoid new debts

There is currently still money for additional investments, for example in digitization and climate protection.

“If there is a recession, then you will have less income.” Buffers have been created for risks.

"But that will not be enough if there is a recession." If the economy collapses, there is the possibility of taking on new debt.

But currently one is still able to make a budget without new loans.

"And we're trying to avoid that." The coalition postponed the tricky question of the new positions, which should not be clarified until September.

Lindner rejects interim tax estimate

When planning for the 2023/2024 double budget, the country has to wait for the next tax estimate in November to be sure how revenues will develop.

Federal Finance Minister Christian Lindner (FDP) rejected the request of his country colleague Danyal Bayaz (Greens) for an interim estimate in the summer, according to the Ministry of Finance in Stuttgart on Wednesday.

According to Kretschmann, some banks are already assuming a recession because of the “polycrisis”.

Risk buffer is reduced in favor of additional expenditure

Nevertheless, the leaders of the coalition agreed on Tuesday evening on the planned additional spending in the 2023/2024 double budget.

At 1.38 billion euros, the corridor for additional spending therefore includes slightly more money than Bayaz planned.

The buffer for possible tax shortfalls was reduced by 140 million euros to 460 million euros.

The reserve is intended if the federal government wants to permanently reduce VAT in the catering trade, for example, then the state must help finance it.

570 million euros on top for ministries and parliamentary groups

Greens and CDU want to spend a good 800 million euros on so-called inevitable additional needs.

This includes expenses for refugees, precautions for the corona pandemic, the penal system or the expansion of broadband, for which the state has to co-finance federal funding.

The country is spending another 570 million euros on political priorities.

According to the Greens, the coalition wants to advance digitization in schools and administration with 150 million euros and climate protection with 80 million euros.

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Bayaz said after the meeting: "We want to do what is absolutely necessary to lead the country well and safely through the crisis." In times of war, inflation, disrupted supply chains and pandemics, it is about "smart risk management".

The buffer for rising prices, for example in construction, remains at one billion euros.

The minister explained: "But that won't be an austerity budget." Money is also flowing into the expansion of renewable energies - including on state buildings.

"In this way we are also making ourselves less dependent on Russian gas and fossil fuels."

Greens: There can be no delay when it comes to climate protection

Green party leader Andreas Schwarz also emphasized investments in climate protection.

You can't afford to lose years here.

"Those who save now on climate protection will add more later." The coalition partners want to discuss during the summer break what the remaining 340 million euros from the corridor should be spent on.

This also includes the question of who should get new jobs.

"In view of multiple crises, we will have to juggle several balls at the same time in the next two years," said Schwarz.

This requires "discipline and caution in housekeeping".

Grandchildren in the future?

CDU parliamentary group leader Manuel Hagel explained that the climate protection package should, among other things, continue the state initiative for electromobility and expand the charging station networks for electric cars.

But Hagel also said: “The future state budget will be a real tightrope act.

We have to prioritize between what is desirable and what our country really needs now.” It is clear that the police, judiciary and civil protection will be better equipped and that the hiring offensive will continue.

Interior Minister Thomas Strobl (CDU) was pleased that the digitization of the administration should get a boost.

“The government and coalition partners are investing in the future in a way that is fair to their grandchildren.”

The FDP faction sees it very differently.

"Thrift is preached until Monday, on Tuesday the world is obviously different," said financial expert Stephen Brauer with a view to the additional spending.

"Prime Minister and Finance Minister were again unable to assert themselves." But that is also difficult, "when everyone knows that you are actually sitting on billions of unused debt rights".

That could be an advantage in times of crisis, "but then I have to be able to keep my ministers in check".

dpa