Federal Finance Minister Lars Klingbeil (SPD) defended the continued high level of government debt, arguing that maintaining this debt burden is necessary to prevent potentially costlier long-term consequences. Speaking in Berlin following a session of the Stability Council, Klingbeil stated that Germany had adhered to the ceiling for net expenditure growth last year and remains aligned with European regulations this year. According to the Minister, Germany’s debt ratio stood at 63.5 percent in 2025, which is significantly lower than the Eurozone average of 87.8 percent.
During the meeting, the ministers and participating senators stressed the urgent need for “growth- and stability-strengthening reforms” at both the federal and state levels. The council, chaired by Bremen Finance Senator Björn Fecker (Greens) and the Federal Finance Minister, focused heavily on reviewing adherence to the medium-term fiscal and structural plan for net expenditures. The council reportedly determined that the established ceilings for net expenditure growth for 2025 and 2026 are likely to be met.
However, the economic outlook was described as challenging, weighed down by weakened economic growth and rising inflation, partly exacerbated by the conflict in Iran. While the current state seemed stable, the Stability Council noted that the projected total federal deficit for 2026 could reach around 4.25 percent of GDP, thereby potentially exceeding the Maastricht deficit limit of 3.0 percent. Furthermore, the debt ratio was projected to rise from 63.5 percent in 2025 to 66.5 percent of GDP in 2026.
In light of these projections, the Stability Council called for “decisive reforms” to ensure the fiscal situation could be improved sustainably. Klingbeil reaffirmed the necessity of investments in infrastructure, modernization, and defense and security sectors. He also announced that the government would be working intensively on an income tax reform.
Addressing the underlying pressures, several officials highlighted the need for expenditure-side structural changes. Fecker pointed out the severe financial burden faced by local municipalities, demanding increased support from the federal government. Meanwhile, State Finance Minister Marcus Optendrenk (CDU) emphasized the importance of such structural reforms to curb the rising trajectory of the national debt ratio.