Editor in chief at IamExpat Media
After a marathon 17 hours of negotiations, the German federal budget for the coming year has at last been finalised. While vetoing the possibility of taking on any new debts, the government has found more money to spend on work and social affairs, climate protection and families.
The federal budget for 2020 is complete. The grand coalition envisages spending around 362 billion euros next year - almost six billion euros more than this year.
Despite Germany’s weakened economy and ailing revenues from taxation, the coalition has, for the seventh time in a row, determined that it will not take on any new debt - thus sticking firm to its so-called “black zero” policy of balanced books.
Here’s an overview of the 2020 federal budget’s key points - and how they might affect you.
The 2020 budget sees the first measures for more climate protection being introduced, as part of Germany’s new climate package. VAT on tickets for long-distance trains will be reduced from 19 to 7 percent - effectively making the tickets cheaper for travellers. A further seven billion euros have been earmarked for CO2 reduction programmes, including energy-efficient building refurbishment, heating replacement, a subsidy for electric cars and research into alternative forms of air transport.
The Ministry of Labour and Social Affairs, by far the largest ministry in Germany, will see its budget grow more than expected, to a total 150,22 billion euros - around 41 percent of the entire federal budget. This is mainly due to the more than 100 billion euros that is being put towards pensions in Germany. The new budget also allocates an extra 800 million euros to the government’s contribution towards housing benefits and 700 million euros for unemployment benefits.
Solidarity surcharge will also be abolished for the majority of taxpayers in Germany, making it the most substantial tax reduction in the federal republic for a long time.
The budgets of the Ministries of Environment and Families are also growing faster than initially planned. Finance Minister Olaf Schulz wants to provide more relief for low-income families - although the gains are not as substantial as in previous years. Child allowances and supplements are due to be overhauled, and child benefits will rise again in 2021. There will also be more money set aside to fund better kindergartens and all-day schools.
The government’s planned cuts to the education budget have been withdrawn; instead, additional funding to the tune of 222 million euros was granted to “Digitalpakt Schule”, a project to improve digital infrastructure in primary and secondary schools in Germany.
Defence spending has been increased to 45,1 billion euros, equivalent to a NATO quota of 1,42 percent of gross domestic product. This increase puts Germany closer to its 1,5 percent target for 2024. The additional 134 million euros will be mainly used to procure ammunition.
Interior Minister Horst Seehofer is one of the budget’s biggest losers, as he will have to contend with around 270 million euros less than he initially thought. The biggest savings will have to be made on IT, while new jobs at the Federal Office of Criminal Investigation and the Protection of the Constitution are to be created, to combat right-wing extremism. The Federal Police will also be allowed to buy 1,7 billion euros’ worth of transport helicopters by 2031.
So, there you have it - plenty of new things heading this way! The Bundestag plans to adopt the draft budget next week. Once it has been adopted, most of the planned changes will come into effect in January 2020. We’ll keep you updated with all of the changes you need to be aware of.