The city of Stuttgart in southwestern Germany might be facing insolvency.
As reported by newspaper Bild today, the large-scale loss of trade taxes – which are paid by resident business – is making a strict budget consolidation necessary.
The city warned that its free liquidity would turn negative by the end of 2025, saying: “We are facing enormous financial challenges. Expenditures exceed revenues.
“Against this backdrop, new debt will be unavoidable from 2026 onwards, as urgent investments can only be financed through loans.”
Previously, Stuttgart had prided itself in remaining debt-free since 2018.
In a subsequent announcement, the city tried to calm nerves, saying it would remain able to pay its dues and there was no danger of insolvency.
Stuttgart’s city councillor for economics, Thomas Fuhrmann, said: “Budget consolidation is a challenging but necessary task. One thing is clear: we must set priorities. Individual services will be reviewed, projects extended over time, and revenues adjusted.
“At the same time, we will ensure that the city remains capable of acting and that Stuttgart’s high quality of life is maintained.”
Local entrepreneur Simon Betschinger blamed German politics for the crisis, writing in a post on X today: “Everything was important in German politics but the economy. Leftist Greens wanted to make their moral teachings our most important export good.
“The impact on the ground of reality will be painful.”
Stuttgart is Germany’s seventh-largest city with more than 610,000 inhabitants and the centre of an agglomeration of almost 3 million people.
It is often referred to as Germany’s car capital as automobile producers Mercedes-Benz and Porsche have their headquarters in Stuttgart. The area is also the seat of many automotive suppliers such as Bosch and Mahle.
Stuttgart and the entire State of Baden-Wurttemberg have been hard hit by the ongoing crisis of the German automotive sector.
Porsche announced in February 2025 that it planned to cut an additional 1,900 jobs in the coming four years and would reduce its workforce in its plants in Stuttgart and Weissach by 15 per cent by 2029.
Mercedes said in September it planned to cut costs by €5 billion by 2027, offering employees generous severance packages.
In November, the German Federal Statistical Office said employment in the automotive sector had fallen to the lowest level since 2011 to 720,000 people – 48,700 employees fewer than in 2024.
