On December 13, the country's government agreed on the budget for the next year

Germany’s government coalition has reached an agreement on the federal budget for 2024 and has also cut spending on the climate fund, Euractiv reports.

The budget for next year will be reduced by €17 billion by cutting federal grants, environmental subsidies, and certain expenses in a number of ministries. The government plans to return to compliance with the so-called «debt brake» next year, which limits the annual public deficit to 0.35% of GDP. However, according to Scholz, it may be temporarily abandoned if Ukraine’s military or financial situation worsens.

The expenditures of the Climate and Transformation Fund (KTF), which is not part of the regular budget, will be reduced by €12 billion in 2024 and by €45 billion by 2027. Its volume will amount to €160 billion in 2024-2027, and, according to German Chancellor Olaf Scholz, will still be very high.

Among other things, this will be achieved by reducing the planned subsidies for the solar industry and financial incentives for the purchase of electric vehicles, said Robert Habeck, Minister of Economic Affairs and Climate Protection. He called the price for preserving the central components, the pillars of the KTF, the development of the hydrogen economy, the decarbonization of industry, and programs to support citizens.

Despite the coalition’s agreement on the draft budget, the lower house of the German parliament must approve it by the end of the year, DW notes. If this does not happen, the government will start working with a temporary budget next year. This means that basic government spending will continue, but other expenditures, such as industrial subsidies, will be frozen.

The budget crisis in the country has been going on since November. On November 15, the German Constitutional Court ruled that the government’s decision to reallocate €60 billion of unused funds from the COVID-19 pandemic to the Climate and Transformation Fund was unconstitutional. The ruling limited the government’s ability to raise money from off-budget special funds.

As GMK Center reported earlier, the German steel association WV Stahl commented on the situation, noting that the transition industry needs legal and financial certainty and planning security for those companies that are ready to invest billions in new and transformational technologies.