German lawmakers weigh controversial budget from Scholz's coalition

After months of difficult wrangling, Germany's coalition government began presenting a budget proposal to lawmakers in Berlin on Tuesday - despite major holes remaining.

Finance Minister Christian Lindner acknowledged that all three parties in the coalition clashed over priorities in the budget, making negotiations particularly difficult and contentious.

He told lawmakers in the Bundestag, the lower house of Germany's parliament, that global crises and a sputtering German economy also weighed on the talks, and that previous governments had an easier time devising a budget.

"We have seen economic and legal limits, but also our respective political limits," said Lindner, a leader of the free-market liberal Free Democrats (FDP), who often clashed with his centre-left coalition partners over his determination to limit spending.

Experts, including the German Bundesbank central bank, have described the figures outlined in the budget as dubious or unrealistic.

So too have leaders from the opposition centre-right Christian Democrats (CDU), who recently raised the possibility of bringing constitutional challenges over the budget in court.

The budget for the coming year is the final one Chancellor Olaf Scholz's coalition will craft before facing voters in a national parliamentary election in September 2025.

The draft budget aims to simultaneously stimulate Germany's sputtering economy, maintain social benefits, relieve taxpayers and uphold pledges to NATO allies to rebuild the country's military.

However, the modest size of the proposed military budget has come in for particular criticism. Although there is an increase of €1.3 billion ($1.4 billion), that falls far short of what Defence Minister Boris Pistorius has argued is necessary.

Lindner and other ministers have left a €12 billion shortfall in the budget, which will have to be filled over the course of the year by cancelled projects and other savings in ministries. According to the Finance Ministry, it is the largest gap in a budget in more than two decades.

The coalition hopes an improved German economy could help close the gap by increasing tax revenue and reducing the amount spent on unemployment benefits.

Another funding gap was only closed by booking funding for the state-owned Deutsche Bahn railway as an equity injection, which does not count as spending against the deficit, instead of direct subsidies.

The draft budget calls for spending nearly €490 billion next year. Social spending will make up by far the biggest area of the budget at €179 billion, including legally mandated welfare benefits.

Just over 10% of that total, €51.3 billion, will be on credit. That kind of deficit spending, which is normally prohibited by strict rules against borrowing anchored in Germany's constitution, is allowed because of the weak condition of Germany's economy.

Mathias Middelberg of the opposition CDU decried the budget on Tuesday as dishonest, irresponsible and highly unrealistic. He accused the government of just hoping to limp through the September 2025 election before running out of money.

"No draft budget has ever contained such an extensive number of uncovered items," Middelberg declared in the Bundestag.

Scholz's centre-left Social Democrats (SPD) and and their junior partners the Greens have also complained about the budget, pointing to cuts to humanitarian aid, environmental initiatives and social programmes.

Both parties would have preferred to borrow more instead by declaring a fiscal emergency and suspending the debt rules, but were blocked by Lindner and the FDP.

"Controversy is part of democracy," Lindner said of criticism to the budget from all sides on Tuesday.

Lawmakers will now begin considering the budget in committees before haggling over changes at a November adjustment session, usually a major political showdown in Berlin that goes into the early hours of the morning.

A final budget is expected to be passed by the end of November.