Even next summer she may submit her debt reduction plan to . And that is because the collapse of the government of the three-party coalition on 6 November 2024 (after the dismissal of the Finance Minister) led to the loss of the relevant deadline. However, there is expected to be an even greater delay in submitting the plan in question to the Commission, as early elections are scheduled for 23 February 2024, while the possibility of direct government formation is not expected as it is impossible to win the absolute majority of Bundestag seats by any party. This means that the prevailing scenario provides for the formation of an allied government and that, in turn, exhausting negotiations between candidate government parties, which could last even 2 or more months. Therefore, the formation of a government should not be expected earlier than the middle of the coming spring. In other words, the upcoming Federal Finance Minister, who will have the duty to draw up and submit a debt reduction plan in Brussels, will see the June threshold… A key political point in the plan to be submitted by Berlin to Brussels is whether the upcoming German government (especially if it is involved in the CDU and the SPD and/or the Greens) will include in its agreement the suspension of brake debt. Friedrich Murch, a CDU leader, who leads the national polls, has left open the possibility of suspending the brake debt, while Social Democrats and market circles propose a “moderate reform” of his. Armin Steinbach, a lawyer and economist at HEC University in Paris, believes that this is wrong that Germany did not submit a debt reduction plan: “It’s a fatal message that risks mocking Germany”. New Finance Minister Gerg Kukies (PD) will spend the early months of 2025 with the so-called temporary budget management. It is based on the government’s plan for 2025 or this year’s budget. Ministries can then spend money in this context, especially on all current payment obligations, but also on projects that have already started. How accurate total expenditure will be next year will only become known when the new government approves a new draft budget. This is likely to last until summer, depending on how long negotiations for the coalition will last. Kukies has already pointed out that the Brussels Commission should take more time in Germany. “We comply with European aid,” the Finance Minister stressed in his interview with Handelsblatt. ‘And it is common for the Commission to give the Member State concerned a little more time if there is no budget yet due to new elections. We are in discussions with the European Commission about this.” The fact that the Commission wants to wait patiently also has to do with the fact that Germany is not considered a problem. The debt ratio is just above the 60% ceiling of economic production and the deficit is below 3%.
Germany: In the air the debt reduction plan due to early elections and window of suspension of the ‘sense’
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