Germany’s ruling coalition sealed a delayed agreement on next year’s budget and new measures to boost the economy, ending weeks of wrangling that had raised questions about the three-party alliance’s ability to govern.

Social Democrat Chancellor Olaf Scholz, Economy Minister Robert Habeck of the Greens and Free Democrat Finance Minister Christian Lindner cemented the accord during talks that began Thursday and dragged into Friday morning. They are due to present details at a news conference at 11 a.m. in Berlin.

“The hard work of the last few months has paid off,” Florian Toncar, one of Lindner’s deputies, wrote in a post on X.

Scholz and his ministers had been under pressure to demonstrate the coalition is still viable after a drubbing in last month’s European Parliament elections. That prompted the main opposition conservatives, who have a healthy lead in the polls, to demand that the next national vote due in the fall of 2025 be held right away.

Negotiations on the latest financing blueprint were complicated by Lindner’s insistence on restoring a strict limit on net new borrowing this year that was suspended to help deal with the pandemic and the energy crisis. The fiscally hawkish FDP leader forced belt tightening on all of this cabinet colleagues except Defense Minister Boris Pistorius.

Net new debt will be around €40 billion ($43 billion) next year, according to people familiar with the planning, who asked not to be identified as the information isn’t public.

About €24 billion will count as new borrowing under the terms of Germany’s so-called “debt brake,” while a further €17 billion in new debt for a pension insurance fund and the state rail operator is excluded.

The government is also planning a supplementary budget for this year with an additional €11 billion in new borrowing, one of the people said. That would take the total to about €50 billion, down from around €70 billion in 2023.

Scholz had initially wanted to get the budget approved in cabinet on Wednesday, but that was pushed back as ministers squabbled over limited funds. They’re now set to sign off on the plan on July 17.

Based on previous comments from Lindner, the latest growth package - which comes on top of a similar set of measures enacted earlier this year - will include:

Once the 2025 budget has been endorsed by the cabinet, it will be sent to parliament for scrutiny by lawmakers.

It would then be expected to win approval in both the lower house, or Bundestag, and the Bundesrat upper house, where the 16 regions are represented, by the end of the year.

  - Bloomberg