The 2024 federal budget has been finalised after a long struggle. The debt brake is to be adhered to again for the first time since 2019 – the year before the coronavirus crisis began. This is only good news for the time being. If the situation in Ukraine deteriorates, the German military aid, which has already doubled to 8 billion euros in 2024, is to be increased further. To this end, the governing coalition would once again have the Bundestag declare a financial emergency and suspend the debt brake once more. So much for the agreement reached by the SPD, Greens and FDP budgeters in the Bundestag's so-called "clean-up session". It comes late and within the current financial year, that has already begun. The verdict of the Federal Constitutional Court on the debt brake had caught the coalition government unprepared and plunged it into a budget crisis with much need for discussion.

Finance Minister Christian Lindner (FDP) is a long way from the envisaged normalisation of budgetary policy following the coronavirus crisis. With a planned expenditure of 477 billion euros in 2024, it is 120 billion euros higher than in 2019, the last "normal" year. Even with moderate growth rates in the five years, which are roughly based on economic growth, such a level would not have been reached. More will be spent in 2024 than in the first coronavirus year 2020. The federal budget has never recovered from the leaps in spending.

It is no coincidence that there is no buffer for unforeseen events. The budgeters have utilised every last euro of the debt brake's scope for borrowing. This is the declared will of the SPD and the Greens. They would go even further if the FDP were not to insist on compliance with the debt brake. Additional spending was already approved in November in order to reverse cuts in the promotion of democracy, child and youth work, voluntary services, active civil society and the fight against anti-Semitism. This is honourable, but it is, however, primarily consumer spending.

The consequence of this planning is that unexpected additional financial requirements no longer fit into the figures. In November, the poor economic situation had already given the government significantly more room for manoeuvre for borrowing 22 billion euros via a higher economic component, compared to the 16.6 billion euros planned in the government draft. Including "financial transactions" of 17 billion euros, net borrowing will soar to 39 billion euros next year. This includes 12 billion euros as the first tranche for the share pension and a capital increase of around 5 billion euros for Deutsche Bahn. Financial transactions have a neutral effect on the debt brake, as federal assets are created in return. However, this still has negative consequences: The additional debt has a far from neutral effect on the federal government's interest expenditure. This will increase by 2 billion euros compared to the government draft. Thanks to the discount on the various federal securities, the budget will only be burdened with an additional 641 million euros – but it is an amount that slightly exceeds the subsidisation of agricultural diesel.

The economic component in the debt brake is intended to allow the federal government to pursue an anti-cyclical fiscal policy. At a reported 70 billion euros, investments are significantly higher than the original plan of 54 billion euros – an amount that was actually realised in 2023. This seems lavish and shows how elastic the concept of investment is in the budget calculation. This is because the share pension and the capital of the railway also trigger the leap in investment.

The difficult birth of the 2024 budget planning has consequences for 2025 – an election year in which governments like to do a lot of good for their voters. The medium-term financial planning from 2025 to 2027, which is regularly presented with the government draft, is obsolete following the Constitutional Court verdict. How the coalition government will deal with its budget in the coming year and beyond is largely shrouded in fog. The CDU/CSU estimates that the traffic light will be short of 36 billion euros in the 2025 budget. The reserve of 48 billion euros, which was built up in the surplus years from 2014 to 2019, will be practically exhausted by 2024. In the medium term, things will also become more complicated when the repayment obligation for the emergency loans kicks in from 2028. The federal government will then be faced with around 12 billion euros per year.

In March, the Federal Cabinet adopted the key points of the federal budget in its usual cycle. This was based on tax revenue and other income. This meant that expenditure was capped. The departments were still able to reallocate internally. Lindner was unable to push through crucial points in 2023 because the governing coalition was at odds internally. The government draft in the summer was delayed. This could happen again in 2025. A promise of stability in the federal budget and a return to a path of normalisation looks different.