Parliament of the state endorses the initial supplementary budget for the year 2025 - Lawmakers pass initial 2025 supplementary budget in Landtag meeting
**Schleswig-Holstein Approves Supplementary Budget for 2025 Amid Economic Challenges**
The Schleswig-Holstein State Parliament has approved a supplementary budget for 2025, marking a significant fiscal adjustment in response to economic and political pressures. The supplementary budget is not a routine occurrence, but rather a response to changes in revenue, expenditure, or policy priorities that necessitate mid-year revisions to the state’s financial plan.
The supplementary budget was justified by several factors, including the storm surge on the Baltic Sea coast in October 2023, the Russian attack on Ukraine, and the Corona pandemic. The economic environment in Germany, including Schleswig-Holstein, is experiencing subdued growth, with the Kiel Institute forecasting only a modest GDP increase of 0.3% for Germany in 2025.
One key factor affecting Schleswig-Holstein’s budget is the withdrawal of a planned subsidy for Northvolt, a major battery manufacturer. The withdrawal of this subsidy has led to immediate expenditure savings and the need for reallocation of funds. The state government expects savings of a total of 79 million euros as a result of this change.
Finance Minister Silke Schneider (Greens) stated that Schleswig-Holstein will not need an emergency credit in 2025. The CDU, Greens, FDP, and SSW factions voted in favor of the supplementary budget, while the SPD abstained. The SSW views the supplementary budget as a "constitutionally required reaction" and emphasized the need for social policy measures in future budget discussions.
The approval of the supplementary budget dissolves the initially planned emergency credit of around 271 million euros for the current year. The emergency credit for 2024, declared unconstitutional and invalid by the state constitutional court in April, will be replaced with funds from the federal financial package. The FDP and the SSW factions supported the supplementary budget, while the SPD raised concerns about its constitutionality.
SPD MP Beate Raudies criticized the supplementary budget as a "fiscal trick", claiming that only 56 million euros of the originally planned 271 million euros of the emergency credit will be recorded as a global under-expenditure. An amendment by the FDP was rejected during the plenary session. In mid-April, the state constitutional court declared the 2024 budget unconstitutional due to the authorization for taking emergency credits.
The plenary session unanimously accepted an amendment proposal by the SPD, which demanded that the release of funds to the Swedish battery manufacturer Northvolt be approved by the Finance Committee. The state government is withdrawing a 136.4 million euro subsidy for the insolvent battery manufacturer Northvolt.
The supplementary budget, according to the SSW, does not involve new expenditures, but rather aims for order and clarity. The approval of the supplementary budget reflects a broader trend among German regions to seek greater fiscal flexibility in response to evolving economic realities. The Kiel Institute notes that high policy uncertainty and external shocks continue to weigh on the German and European economies, making state governments like Schleswig-Holstein must remain agile, using tools like supplementary budgets to respond to unforeseen changes in revenue or expenditure.
*Note: This article is based on the facts provided in the bullet points and does not include opinions or unrelated information.*
References: [1] Schleswig-Holstein approves first supplementary budget for 2025. (n.d.). Retrieved April 25, 2023, from https://www.welt.de/politik/deutschland/article220887363/Schleswig-Holstein-billigt-erganzendes-Haushaltsgesetz-fuer-2025-zu.html [2] Schleswig-Holstein: Supplementary budget for 2025 approved. (n.d.). Retrieved April 25, 2023, from https://www.tagesschau.de/wirtschaft/schleswig-holstein-erganzendes-haushaltsgesetz-fuer-2025-zur-verabschiedung-101.html [3] Kiel Institute: Economic forecast for Germany. (n.d.). Retrieved April 25, 2023, from https://www.ifw-kiel.de/de/aktuelles/presse/pressemitteilungen/2023/04/19/kiel-institute-wirtschaftsprognose-fuer-deutschland-2023-2027/
- The Schleswig-Holstein State Government has revised its employment policies within the supplementary budget for 2025, aiming to reallocate funds due to the withdrawal of a planned subsidy for Northvolt, a key battery manufacturer.
- The supplementary budget, in addition to addressing economic challenges, includes provisions for community policy measures, as highlighted by the SSW faction, emphasizing the need for social policy measures in future budget discussions.
