In a last-minute agreement, the leaders of Germany's coalition government, comprising the SPD, Greens, and FDP, have reached a compromise on the federal budget for 2025. The deal addresses a significant financial gap while adhering to the constitutional debt brake.

The compromise involves reallocating funds to the state-owned Deutsche Bahn, providing it with a 4.5 billion euro capital injection.

This move reduces the budget shortfall from 17 billion euros to 12 billion euros.

Despite this reduction, the budget still presents a considerable challenge for parliamentary discussions.

The government remains optimistic that economic developments will further narrow the gap.

The budget proposal is set to be submitted to the Bundestag and Bundesrat for review, with discussions expected to begin in September.