Finance Associated Press, December 14 (edited by Ma Lan).After weeks of negotiations, the German Confederation** reached an agreement on the 2024 budget and announced that it would restart the debt limit next year and limit net borrowing to 0 percent of GDP35%。
German Chancellor Olaf Scholz said that by ending some of the climate policy subsidies and cutting sectoral spending, the federal government is expected to save 17 billion euros in the budget.
He stressed that the prioritization of spending is due to the need to understand what can and cannot be afforded now. No one likes to cut budgets, but it's necessary.
German society breathed a sigh of relief. Bertram Kawlath, vice president of the VDMA, an association of German mechanical engineers, said in a statement that it was important for the federal authorities to reach an agreement. The uncertainty is behind us and this clears the way for major investments.
At the expense of economic developmentIn the proposed 2024 budget, Germany will fulfill its aid commitments to Ukraine. Germany's support for Ukraine will double next year to 8 billion euros compared to 2023 and provide an additional 6 billion euros for Ukrainian refugees.
However, Germany** will cut its budget aggressively on climate and transition** to support the green transition of companies, and in 2024, support for climate** will be reduced by 12 billion euros. By 2027, the budget will be reduced by a cumulative 45 billion euros. This will affect the German Ministry of Transport and Construction, as well as subsidies for the solar industry.
At the same time, Germany** will reduce tax payments by 1.4 billion euros per year through the new plastics regulation, which was previously paid by Germany** on behalf of German plastics companies. In addition, Germany** has increased CO2 surcharges on fuel, heating oil and natural gas.
These measures have closed a huge hole in the German budget in a timely manner, but in the eyes of some agencies, this tearing down the east wall and making up for the west wall is actually at the expense of the German economy.
Commerzbank estimates that Germany's GDP will fall by 03%。
Carsten Brzeski, global head of macro at ING, pointed out that the 2024 budget looks to have a manageable impact on the economy, but it will not end the debate in the market about how Germany balances large-scale investment and budget.
Marcel Fratzscher, director of the DIW Institute for Economic Research, a German think tank, further criticized the decision to make up for the budget gap by cutting spending, which means that Germany will permanently reduce its support for climate protection and transition by 60 billion euros.
In addition, he slammed the reduction of existing fossil fuel-related subsidies at additional costs for consumers, while the reduction of around 1.5 billion euros in state welfare spending would hurt the spending power of low-income German households. The German people, he concluded, are the ultimate losers of this budget.
Finance Associated Press Ma Lan).