German 2024 budget could be ready soon – Scholz

BERLIN (Reuters) -Germany’s coalition partners could soon finalise a draft budget for 2024, Chancellor Olaf Scholz said on Monday in Berlin.

“We have made so much progress that we can be very confident that we will be able to communicate the results to you soon,” said Scholz.

He will continue budget negotiations with Finance Minister Christian Lindner and Economy Minister Robert Habeck on Monday evening.

Scholz’s three-way coalition is trying to strike a budget deal after a court ruling last month upset its financing plans and forced it to suspend a constitutionally enshrined “debt brake” for the 2023 budget.

Lindner, of the fiscally conservative Free Democrats (FDP), wants to impose the debt brake for 2024, which restricts Germany’s public deficit to 0.35% of gross domestic product.

But Scholz and Habeck want the debt brake suspended again in 2024, for the fifth year in a row.

Germany’s coalition partners could agree on a draft budget this week, Saskia Esken, co-leader of Scholz’s Social Democrats (SPD), said on ZDF television on Monday.

“We have made significant progress,” Esken said. “Something will happen now.”

The Greens believe an agreement is possible by Wednesday.

“A timely solution is possible,” said Green co-leader Ricarda Lang in Berlin on Monday. “And of course it is also possible to finalise this by the middle of the week.”

The head of the FDP parliamentary group in the Bundestag, Christian Duerr, also expressed optimism on Monday on Deutschlandfunk radio.

Lindner has estimated Germany faces a funding gap of around 17 billion euros in a budget of around 450 billion for 2024.

“That is manageable,” Duerr said.

However, the consolidation path must be continued, he said, referring to the need to cut costs.

FDP secretary general Bijan Djir-Sarai said in Berlin that thoroughness must take precedence over speed.

He rejected tax increases, which are not an option for the FDP. “That would be absolutely the wrong way to go,” Djir-Sarai said.

Spending cuts are another option to fill the gap. Scholz made clear on Saturday, however, that there would be no cuts to the welfare state, an area where Lindner has called for reform.

According to government spokesman Wolfgang Buechner, aid for Ukraine was also not up for discussion. “Nothing will change in this regard.”

(Reporting by Christian Kraemer and Holger Hansen, writing by Maria Martinez, editing by Rachel More, Jane Merriman, Bernadette Baum and Alex Richardson)