German government faces double-digit billion gap in 2025 budget

BERLIN (Reuters) – The German government is already facing questions about its midterm budget plans, even as this year’s draft moves towards the finish line in the wake of a constitutional court ruling that threw leaders’ previous plans into disarray.

A finance ministry spokesperson said on Friday the government is currently facing a gap in “the lower double-digit billion range” in its 2025 budget plans.

A need for savings of around 5 billion euros ($5.4 billion) per year had already emerged from the financial plan covering the period up to 2027 that was adopted last year.

Since then, further burdens have been added, the spokesperson said.

The previous financial plans were set before the constitutional court ruled in November that the coalition’s move to re-allocate 60 billion euros of unused debt from the pandemic era to its climate and transformation fund was unconstitutional. That created another gap in the 2024 budget.

In addition, German Defence Minister Boris Pistorius called for higher defence spending to be anchored in the federal budget in order to meet NATO defence spending targets in the long term.

“We have a commitment from the chancellor that we will invest at least 2% of gross domestic product in defence until the 2030s. In other words, explicitly even if the special fund is used up from 2027,” he told Spiegel magazine in an interview.

“The calculations must now be also be reflected in the medium-term financial planning,” he said, adding that the course for increasing the defence budget must be set this year.

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