"Sound financial policy is the anchor that provides stability for our society, and it is the hallmark of this coalition," stressed Federal Finance Minister Olaf Scholz in the German Bundestag. The 2019 budget avoids any new borrowing and allows Germany to finally comply in full with the Maastricht criteria. "This is a great achievement and a contribution to the security of future generations," said Olaf Scholz.
In the new budget and in its financial planning the German government has set three priorities: easing the financial burden on families, promoting housing construction, and forging ahead with digitalisation.
The German budget for 2019 provides for total spending of 356.4 billion euros – 12.8 billion euros more than in 2018. In 2019, for the first time since 2002, Germany will once again be below the EU’s debt limit of 60 per cent of gross domestic product (GDP).
Strengthening cohesion in Germany
The aim of the German government is to ensure social cohesion among the people now and in the future. That is why, explained Olaf Scholz, that his budget is intended to "put more money in the pockets of the people". The German government has already taken several steps in this direction with the Act to Ease the Financial Burden on Families (Familienentlastungsgesetz), the reduction in unemployment insurance contributions, and improvements in state pensions. Additional funds have also been earmarked to improve schools and childcare at nursery level, to promote social housing construction and the protection of tenants’ rights, and to train the long-term unemployed.
Investing in an effective state
Investment in the coming year will focus on digitalisation. The German government has undertaken to move forward faster on developing digital infrastructure, on promoting research and on digital education for the people.
Security and law and order are again important issues. The German government is providing significant funding to ensure that the federal police force, the customs authorities and the Federal Office for Migration and Refugees have the staffing levels they need. More money will also be available for defence and for development cooperation.
Making provision for the future
Speaking in the German Bundestag, the Federal Finance Minister called for provision to be made now for the future. Although the economy is still growing he said, employment is still rising and tax revenues are high, it is thought that "this trend will not simply continue as it has in the past".
He warned of the risks to economic development. The withdrawal of the United Kingdom from the European Union, for instance, poses major challenges for the remaining member states. "We must develop the future of our country," said Olaf Scholz.
That makes it important to stabilise the European Union in economic terms, and ensure it is equipped to face any future crises. With his French counterpart Bruno Le Maire, Olaf Scholz aims to achieve important progress swiftly: on the eurozone budget, the further development of the European Stability Mechanism (ESM) to establish a monetary fund, and on the taxation of international businesses. "This is the time to tackle these issues," said Olaf Scholz.