The German Cabinet of Ministers plans to approve the 2025 budget on Wednesday after months of debate, with military aid to Ukraine expected to be cut to €4 billion from about €8 billion this year, Reuters reports, according to UNN.
Next year's budget will be less generous for Ukraine: the government will cut military aid to the country to 4 billion euros from about 8 billion euros in 2024
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The eurozone's largest economy avoided recession at the beginning of the year, but growth was slower than expected, and the German government, like the UK and France, is struggling to plug the budget gap, the publication points out.
The German government, the newspaper writes, hopes that a strong economic recovery will help it close the 17 billion euro gap between projected expenditures and revenues.
At the same time, Germany's budget for 2025, as noted, includes medium-term financial planning until 2028, when the special fund of the armed forces will expire to achieve NATO's minimum spending goals.
A year before the federal elections, reaching an agreement on the budget and a long-awaited package of measures to kick-start the economy has reportedly been a major test for the coalition, which is often accused of being hampered by internal divisions.
In the June European elections, the ruling parties in Germany's coalition government showed poor results: the far-right Alternative for Germany came in second place after the Conservatives.
A few days after Russia's invasion of Ukraine in 2022, German Chancellor Olaf Scholz announced a "Zeitenwende" (German for historic turning point) with the creation of a special fund of 100 billion euros to modernize the armed forces and reach a level of NATO defense spending equivalent to 2% of GDP.
In 2028, the regular budget deficit will amount to 39 billion euros, with 28 billion euros needed to meet NATO targets without a special fund, according to sources in the Finance Ministry. According to the sources, in 2026 and 2027, the funding gap will be 13 billion euros.
The government also plans to approve on Wednesday a supplementary budget for the current year with additional borrowing of 11 billion euros, which will total 50.3 billion euros of net borrowing, the sources said.
Drawing up the 2025 budget and the medium-term fiscal roadmap to 2028 has been difficult, as German Finance Minister Christian Lindner reportedly demanded a period of fiscal consolidation after increased spending during the COVID-19 pandemic and the recent energy crisis.
In addition, according to the Ministry of Finance, the new EU rules further limit Germany's budgetary potential by requiring stricter adjustments than those required by national law.
"I expect all member states to abide by our budget rules," Lindner said on Monday before a meeting of EU finance ministers. - "Maintaining the sustainability of our public debt is in our common interest.