Germany's Coalition Narrowing Budget Gap with Infrastructure Investments

Germany's coalition government has reached a compromise to reduce the nation's budget gap from €17 billion to €12 billion. The agreement includes substantial investments in rail infrastructure through Deutsche Bahn. The 2025 budget plan will be reviewed by the Bundestag, with the final approval expected by year-end.

In a significant move to reconcile its fractured 2025 spending plan, Germany's coalition government has agreed to shrink its budget gap from €17 billion to €12 billion. This compromise aims to address the disparities between expected spending and revenue.

Key to the agreement is an injection of €4.5 billion in equity into Deutsche Bahn's infrastructure division, replacing previous subsidies. Additionally, Deutsche Bahn will receive a government loan of €3 billion for redeeming existing infrastructure bonds.

According to Chancellor Olaf Scholz, these adjustments enable the government to invest more in transport infrastructure, totaling €15.1 billion for rail. The revised budget draft is set to be deliberated by the Bundestag in September, following parliamentary summer break, with final reviews due in November.

(With inputs from agencies.)