Once again the federal budget will not involve any new debt next year or throughout the entire planning period up to 2023. This illustrates the fact that the German government is sticking to its sound, reasonable budgetary policy. Expenditure in the coming year is set to total 362.6 billion euros – an increase of 1.7 per cent over 2019. This figure will rise to 375.1 billion euros by 2023.
What are the priorities set by the German government?
Although Germany’s economy is still forecast to grow, growth is expected to be slower than has been seen in recent years. That will impact on tax revenue, which makes it important to plan for the future and set the right priorities. Across the country, the people are to benefit from Germany’s economic success.
Social cohesion and investment in a modern, future-proof country – these are the goals of the German government when it comes to planning the national budget. Education and research, infrastructure and digitalisation are accorded particular importance.
Germany also accepts its international responsibilities. The defence budget is set to rise, and expenditure in the field of development cooperation is to remain at its current record level.
What will the government spend money on?
The German government intends to reduce the financial pressure on families, with further increases in child benefit and the tax allowance for children planned in the 2020 federal budget. In 2021 the solidarity surcharge will be discontinued for 90 per cent of those currently paying it. To enable the federal states and local authorities to reduce pre-school childcare fees and improve childcare services, the federal budget makes provision for further reducing their financial burden.
The federal government is also to provide greater support to the federal states in the construction of affordable properties to rent. And a new grant is to help families with children buy or build owner-occupied housing.
So that Germany can remain innovative and forward-looking, the federal government will use specific impetus to strengthen the private sector, one example being the field of artificial intelligence.
The adoption of the benchmark figures for the federal budget along with the financial plan is the cornerstone of the annual procedure for drafting and finalising the budget. It lays out the expenditure for all federal ministries and points the way forward. Find out more here about how the federal budget is drawn up.
What happens now?
At the end of June the Cabinet will adopt the government’s draft budget in the form of the Budget Act and financial plan. This is then deliberated by the parliament. In autumn the German Bundestag will vote on the budget. The second chamber of the German parliament, the Bundesrat, will also debate the government draft. It does not need to approve the budget but it can comment on it.