Preliminary data released this week by the Federal Statistical Office (Destatis) reveals a concerning surge in Germany’s public debt, raising questions about the sustainability of current fiscal policies and highlighting regional disparities in financial management. At the close of the second quarter of 2025, total public debt reached €2.554 trillion, representing a 1.2% increase, or €30.6 billion, compared to the previous quarter. This figure encompasses the budgets of the federal government, states (Länder), municipalities and social security institutions, alongside affiliated extra budgets.
The primary driver of this increase stems from a €30.9 billion (1.8%) rise in federal debt. Critically, the “Special Assets of the Armed Forces” (Sondervermögen Bundeswehr) significantly contributed to the upward trend, increasing its debt by 9.2%, or €2.4 billion, to a total of €28.3 billion. This expansion underlines the ongoing debate surrounding the allocation of funds and the long-term financial implications of the Bundeswehr’s modernization efforts, particularly amidst broader economic uncertainties. Critics argue that overreliance on specialized asset funds obscures the true scope of federal spending and risks creating unsustainable dependencies.
While federal debt escalated, the Länder demonstrated a more tempered performance, with total debt decreasing by €5.7 billion (-0.9%) to €609.8 billion. However, this regional variation masks significant internal discrepancies. Sachsen-Anhalt experienced the most substantial percentage decrease in debt (-3.7%), followed by Baden-Württemberg and Niedersachsen (-2.6% each). Conversely, Mecklenburg-Vorpommern recorded the highest percentage increase (+5.5%), signaling potential fiscal vulnerabilities within that state. Rapid debt accumulation in Schleswig-Holstein (+2.8%) and Hessen (+2.5%) further complicates the overall picture, raising concerns about regional economic resilience.
The escalating debt burden on municipalities and municipal associations is another cause for concern. Debt in this sector increased by €5.4 billion (+3.1%) to €179.8 billion. Brandenburg (+5.7%), Rheinland-Pfalz (+5.1%) and Schleswig-Holstein (+4.2%) experienced the most pronounced percentage increases, indicating a deepening financial strain on local governments. The sole respite came from Thuringia, which recorded a minor decrease (-0.6%).
The seemingly modest decline in social security debt (-0.2 million euros, -1.7%) offers little comfort given the overwhelming trajectory of the broader debt picture. The overall rise in public debt calls into question the government’s ability to adhere to fiscal targets and demonstrates a need for a rigorous reassessment of spending priorities and a more equitable distribution of the burden across different levels of government. The escalating debt levels, particularly in municipalities and the Bundeswehr’s designated assets, will likely fuel further scrutiny of current economic policies and trigger renewed calls for fiscal responsibility and long-term financial planning.