Germany's Coalition Finalizes Reduced Budget Deficit Target for 2025

Germany's coalition government has agreed to reduce the 2025 budget deficit target from 17 billion euros to 12 billion euros. This deal aims to save the budget plan after initial proposals failed. New investments in rail infrastructure and strategic cuts are part of the plan, with parliamentary approval expected by year-end.

Germany's coalition government has reached an agreement to narrow its 2025 budget deficit target from 17 billion euros ($19 billion) to 12 billion euros. This compromise aims to salvage the spending plan after initial proposals fell apart.

The cabinet finalized its 2025 budget in July but left open the question of reducing the gap between spending and revenue. Finance Minister Christian Lindner announced the new target, emphasizing that single-digit figures would have been ideal.

The agreement paves the way for a draft budget to be submitted to parliament, ensuring the legislation remains on track for year-end approval. Deutsche Bahn's infrastructure division will receive 4.5 billion euros in equity, replacing earlier subsidies. The rail operator will also get a 3 billion-euro loan for redeeming market-issued infrastructure bonds.

(With inputs from agencies.)