Significant challenges are emerging for Germany’s finance ministry as it finalizes its budgetary planning. According to sources within the government, the projected shortfall in the new financial plan is now estimated to increase by a low double-digit billion-euro amount, pushing the total deficit beyond 150 billion euros.
This revised estimate represents a considerable escalation from the previous projection, which, in a plan presented in June, anticipated a budgetary gap of 144 billion euros for the period between 2027 and 2029.
The widening gap is attributed to recent agreements reached within the ruling coalition. Compromises, including the accelerated implementation of a new parental benefit program scheduled for 2027 and increased financial support for regional states and municipalities, have placed additional strain on the financial planning.
Finance Minister Lars Klingbeil is expected to propose a new borrowing requirement exceeding one trillion euros in the finalized financial plan extending to 2030. Previous projections already anticipated a net borrowing requirement of 846.9 billion euros across the period from 2025 to 2029. Government sources indicate that the year 2030 alone, considering exceptions to Germany’s debt brake for defense spending and the utilization of funds from a special infrastructure fund, is projected to see new debt exceeding 150 billion euros. Consequently, the total net borrowing for the years 2025 through 2030 is likely to surpass the trillion-euro mark.
The cabinet is scheduled to formally approve the draft budget for 2026, along with the overall financial planning to 2030, next Wednesday.