BERLIN (Reuters) – Germany’s public deficit is expected to reach around 1.75% of GDP in 2024, before falling to around 1% in 2025, Germany’s Stability Council, which coordinates the federal and national government budgets, said on Monday.

The structural public deficit, corrected for cyclical and one-off effects, should reach 1.25% of GDP in 2024, before falling to 0.75% in 2025 and showing a slight increase again in the following two years, said the board.

In 2028, at the end of the forecast period, the deficit should reach 1% of GDP, according to estimates by the Council, responsible for guaranteeing the sustainability of public spending.

The Council’s advisory committee considers the deficit targets plausible, but believes that budgetary restrictions will be necessary to achieve these targets.

Until the end of the projection period, Germany will not comply with the rules of the European Stability and Growth Pact, which set a ceiling on the structural deficit at 0.5% of GDP, the Council also clarified.

“A moderately restrictive budgetary policy will not only curb inflation, but will also create room for maneuver for investment,” declared Finance Minister Christian Lindner at a press conference organized after the Council announcements.

The Minister of Finance believes that the preparation of the draft budget for 2025 will be complicated, because further cuts in spending will be necessary.

Ministers had until last week to submit their proposals for next year.

Christian Lindner noted that five ministers had submitted proposals that were too expensive. The ministries concerned are those of Development and Defense, led by social democratic ministers (SPD), as well as that of Foreign Affairs (Greens).

Discussions around the budgets of the Labor and Interior Ministries (SPD) could also prove complicated.

Christian Lindner explained that German growth did not allow taxpayers’ money to be spent internationally.

“Our economic strength is not enough to fully honor all the international commitments of the ministries,” the Finance Minister said, adding that the main thing at the moment is to support Ukraine in its fight against Russia.

Discussions between Germany’s governing coalition partners, made up of the Greens, SPD and Free Democratic Party, will continue until the first draft budget is approved on July 3.

(Report by Maria Martinez and Christian Kraemer, Corentin Chappron, edited by)

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