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RTRS: Budget Sees '22 Growth At 3.6%, But Ukraine War Not Factored In

GERMANY

Reuters reporting that according to an unnamed source, the 2022 German federal budget sees the economy growing by 3.6% in real terms this year, but that the impact of the war in Ukraine has not been taken into account.

  • RTRS: The preliminary budget for 2022 included a credit authorisation of EUR100bn for special expenditutes for the armed forces.
  • RTRS: German budget plan sees compliance with the debt brake from 2023. Financial planning sees new borrowing rising to EUR13.7bn by 2026.
  • Reuters says that Finance Minister Christian Lindner will present the draft budget on Wednesday to the Cabinet. However, supplementary budget will be provided to reflect the impact of the Ukraine war on public finances.
  • Going forwards, the German finance ministry will have to engage in an activity that is unprecedented in recent history: accounting for a major uptick in German defence spending. At the outbreak of the war in Ukraine, Chancellor Olaf Scholz made the commitment - backed up by Cabinet and supported by the public according to polls - to boost German defence spending to the NATO guidline committment level of 2% of GDP.
  • In 2021, Germany spent the equivalent of 1.53% of GDP on defence, with the additional 0.5% accounting for an estimated EUR19bn of recurring extra spending per annum.
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