Sensational: no approval of the budget in Germany which will begin 2024 with the provisional financial year

The reason is simple: the leaders of the traffic light coalition, Chancellor Olaf Scholz, Economics Minister Robert Habeck (Greens) and Finance Minister Christian Lindner (FDP) have not yet managed to find a compromise to close the billion-dollar gap . They have been negotiating for days, but the hole caused by the Constitutional Court 's decision is too large to fill.

Even if an escape route were found, the times are now becoming too short for all the formal parliamentary steps.

We are moving towards provisional operations with only strictly necessary expenses

This means that Scholz will probably have to show up empty-handed at the SPD party congress, which begins on Friday morning in Berlin, and indeed he will show up with heavy cuts in public spending.

Since Lindner is now present at the meeting of finance ministers in Brussels, further negotiations cannot begin before Friday. Scholz wants to give a keynote speech at the party congress on Saturday. So negotiations cannot continue until next week

The government's objective remains to be able to hold at least the so-called adjustment meeting of the budget commission, to bring order to the 2023 budget devastated by the Court's decision on "Special Funds". At this point, however, the Bundestag and the Bundesrat cannot decide and approve the finance law before next year, the new year will begin with a provisional budget. Only expenses that are strictly necessary and required by law can be incurred; everything else has to be approved on a case-by-case basis by Finance Minister Lindner, a super austere liberal who can't wait to cut what can be cut.

There is a risk of massive cuts

There is a risk of major budget cuts. According to Lindner, 17 billion euros are still missing for next year and the fact of starting the year with the budget in provisional operation, without approved expenditure, risks favoring these cuts. However, there will be no funds for the energy transition and also money destined for Ukraine for military and humanitarian aid will be cut, at least until the Bundestag and Bundesrat can approve the new budget law in January. C

There will obviously also be an impact on growth and it will not be light.