According to a subsidy report presented in Berlin from the Freiburger institute, the German state plans to allocate a total of 321 billion euros in subsidies for 2026. This amount represents seven percent of the Gross Domestic Product and equates to approximately 7,000 euros for every working citizen. This figure remains slightly below the peak established in 2023, which was influenced partly by the pandemic.
Of the total 321 billion euros, 235 billion euros are earmarked for national (federal) levels. Within this portion, 150 billion euros are for financial aid, which marks a threefold increase compared to ten years ago. Lars Feld, an economist from the Walter Eucken Institute that compiled the report, criticized that three-quarters of this financial aid lacks strong economic grounding and is increasingly financed outside the core budget, accounting for 42 percent. The remaining 85 billion euros are allocated to tax benefits, primarily benefiting large corporations while providing only a minor share to small and medium-sized enterprises.
Feld also stated that the high subsidy sums have not demonstrated any positive impact on economic growth. For instance, despite massive investments in the Deutsche Bahn railway network, its reliability has deteriorated. While environmental subsidies have surged by a factor of 3.5 since 2022, other subsidies are undermining their effectiveness. As a policy recommendation, Feld advises a uniform reduction in subsidies, a lowering of taxes, and a reduction in regulatory burdens.