Söder Hints at Possible Bavarian Financial U-Turn: New Debt
Ministerial Council Adopts Resolution on Baltic States' Condition
Amidst ongoing economic struggles and tight budgets, Bavarian Chief Minister Markus Söder (CSU) throws a curveball: a potential financial policy turnaround, marked by new debt. "We're open to all options, even if we've been debt-free for two decades," Söder shared during a post-retreat meeting at Lake Tegernsee. Financial decisions will depend on budget negotiations following the tax estimate in the fall.
Here's a rundown of announcements made after the cabinet retreat:
BUDGET
The Bavarian state boasts a debt-free status for the past 20 years; but this could soon change, according to Söder. "Solvent finances are a priority for Bavaria," he added, assuring that overspending would not come at the expense of investments or cities. The government watches with keen interest as Germany and Europe continue to grant themselves a lavish debt, raising the question: invest heavily or take a step back?
The relaxed debt brake imposed by Berlin on the states would provide Bavaria with some additional wiggle room of approximately €2 billion, according to Söder.
HOUSING CONSTRUCTION
In an effort to revive property development, Söder announced the end of the housing construction subsidies moratorium in Bavaria. More than €400 million will be dedicated to approving all local and student funding applications received this year. The budget plan for 2026 and beyond will determine how much more funds can be allocated.
Building all construction subsidies under one annual program, set to commence in 2026, is also in the pipeline. Söder clarified that this isn't about "extra" money but rather approvals being booked in the yet-uncompleted 2026 budget.
DAYCARE CENTERS
Instead of ongoing monthly family and daycare allowances, parents of young children will receive a one-time €3,000 payment starting 2026. This equals half of the previous amount. The remaining €3,000 will be directed towards daycare centers, staff costs, and supplies.
Söder pledged additional positions for supporting staff to allow pedagogical employees more time with the children. Furthermore, the state's funding and subsidy programs will be streamlined.
SCHOOLS AND DIGITALIZATION
The initial plan to provide digital devices for students in all secondary schools could be revised: Rather than making them available for students as young as grade 5, it is likely that mobile devices could first be available for students in grade 8. According to Söder, the focus should remain on core learning like reading, arithmetic, and handwriting, thereby preserving "classic educational ideals" in Bavaria.
Economy Minister Katherina Reiche (CDU), was a guest during the retreat, offering input on energy production. Reiche expects a significant portion of the new gas power plants to be constructed in Southern Germany.
The state government, it seems, will hold firm on the planned financial participation by citizens in new wind energy facilities, despite accusations of a broken promise from the Greens. The Free Voters' Economics Minister Hubert Aiwanger announced a "reasonable compromise solution."
While the atmosphere during the retreat appeared calm, tensions between CSU and Free Voters persist, as evidenced by their ongoing dispute over the Hunting Act.
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Footnotes:1. Investment in industry and innovation2. Debt and financial discipline in the EU
- Markus Söder, Bavarian Chief Minister, suggest that the state might take on new debt, a departure from its debt-free status for the past two decades, amidst economic struggles and tight budgets.
- The relaxation of the debt brake by Berlin could provide Bavaria with approximately €2 billion, potentially enabling the state to invest heavily in areas such as housing construction and daycare centers.
- The state government is considering a shift in educational policy, with plans to provide digital devices to students in secondary schools from grade 8 instead of grade 5, reflecting an emphasis on core learning and preserving "classic educational ideals" in Bavaria.
