Klingbeil Urges Colleagues to Adopt Strict Budget Cuts

In light of existing challenges, the federal budget must undergo structural consolidation, according to Lars Klingbeil, the Federal Minister. This call for fiscal discipline comes despite the recent easing of the debt brake for defense expenditures and the establishment of a credit-financed infrastructure fund worth up to EUR500 billion, which is intended to provide necessary investment flexibility.

According to recent directives, government ministries are generally permitted to initiate projects that either reduce revenues compared to previous plans or increase expenditures only if equivalent savings can be made from within their respective budgets. Furthermore, all departments are required to cut 0.5% of their positions this year and 2% next year, with security agencies exempt from these reductions.

Should any ministers have hoped to finance certain expenses through loans following the creation of the special infrastructure fund, they have been informed that such an approach will not be feasible. In fact, any such financial maneuvers will result in corresponding reductions to the respective ministry's budget, as clarified by the State Secretary responsible for coordinating budget preparations on behalf of Klingbeil.

The funds from the infrastructure pool are primarily earmarked for critical investments in railway stations, rail networks, digital infrastructure, bridge modernization, and measures aimed at enhancing energy supply security and reducing energy costs. Additionally, there are plans to expand broadband and mobile networks while also modernizing administrative processes.

Each year, EUR10 billion will be allocated to the federal Climate and Transformation Fund (KTF), which supports initiatives aimed at environmentally sustainable transformation within the country. Concurrently, the KTF's resources are expected to be utilized more efficiently, with smaller funding programs gradually phased out.

Klingbeil is set to present the draft budget for the current year of 2025 to the federal cabinet on June 25, highlighting the urgency of the situation. The framework for the 2026 budget is also expected to be approved before the summer recess.