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German lawmakers approve supplementary budget for 2023

December 15, 2023

It comes after the Bundestag approved a proposal by the governing coalition to suspend borrowing rules, known as the debt brake, for the fourth time in a row.

https://p.dw.com/p/4aCg6
Lawmakers sit in the German lower house of parliament
The Bundestag, passed a supplementary budget for 2023 after suspending borrowing rules againImage: Bernd von Jutrczenka/dpa/Deutsche Presse-Agentur GmbH/picture alliance

Germany's lower house, the Bundestag, on Friday approved a proposal by the governing coalition to suspend borrowing rules, known as the debt brake, before passing a supplementary budget for 2023.

It comes after weeks of negotiations in response to a shock ruling by the Federal Constitutional Court in November that decided €60 billion ($65.75 billion) in emergency loans to combat the coronavirus pandemic could not be reallocated to a climate fund that would have been the source for several areas of spending. 

Heating and gas price hikes set for 2024

Earlier this week, Chancellor Olaf Scholz's three-party governing coalition also struck a deal on spending for 2024 that will entail many drastic cuts.

To help finance the supplementary 2023 budget, German lawmakers agreed on higher CO2 price hikes set to take effect in January 2024 that will be felt at the gas pump and on home heating bills.

The price currently stands at €30 ($33) per ton of CO2, but this set to rise to €45 in 2024, instead of €40 as previously planned. Gasoline will become about 4.5 cents more expensive per liter. This is expected to grow government revenue by about €1 billion.

Scholz's coalition reaches new budget deal

Why did Germany need an extra budget?

As part of the governing coalition plan to solve a budget crisis, lawmakers had to approve another exception on strict borrowing rules to retroactively cover costs like energy subsides for consumers.

It is the fourth time in a row the Bundestag has suspended the "debt brake."

Germany is notoriously wary of building up too much government debt. Under German law, additional borrowing is only allowed in the event of natural disasters or emergencies "that are beyond the control of the state and significantly affect the state's financial situation."

Germany's coalition government has justified the borrowing on several grounds, including the massive rise in energy costs due to Russia's ongoing war in Ukraine and reconstruction efforts following the 2021 floods in western Germany.

The planned new debt will then total €70.61 billion, which is €44.8 billion above the permissible borrowing limit.

While you're here: Every Tuesday, DW editors round up what is happening in German politics and society. You can sign up here for the weekly email newsletter Berlin Briefing. 

wmr/rt (dpa, Reuters, AFP)