Germany’s public sector has incurred a record deficit in 2025, according to numbers published by the country’s Federal Statistical Office.
Altogether, the report today shows the shortfall grew to €119.1 billion, up 3.4 per cent from 2024.
This number includes the deficits incurred by Germany’s federal government, its 16 state administrations as well as its many municipalities and its social insurance system.
The total deficit amounted to 2.7 per cent of Germany’s gross domestic product (GDP). Previously, the Federal Statistical Office had expected a shortfall of 2.4 per cent of GDP.
“Expenditure rose more sharply than revenue,” the agency said. Germany spent 8.1 per cent more on interest for existing debt in 2025. Social welfare payments also rose, by 5.6 per cent.
Investments picked up by 10.3 per cent – primarily due to the first projects financed by the debt-financed “special funds” for infrastructure, climate neutrality, and defence that German Chancellor Friedrich Merz and his government set up in 2025.
The biggest deficit rise took place at the federal level. The German Government’s budget shortfall ballooned from €60.9 billion in 2024 to €79.6 billion in 2025.
Germany’s municipalities also slid deeper into the red with their cumulative deficit rising by €7.1 billion to €28.1 billion. The 16 states and the social insurance system managed to reduce their shortfalls by €11.8 billion and €10.1 billion, respectively.
The worsening fiscal situation has alarmed some onlookers.
German entrepreneur Emanuel Boeminghaus wrote today on X: “If deficits widen retrospectively, the credibility of fiscal policy will suffer. Rising interest burdens, growing social expenditure and a weak economy are adding to the pressure.
“The question is no longer whether to save or increase spending, but who will ultimately foot the bill. The public purse is tighter than admitted, and this will have consequences for every taxpayer.”
Economists, though, predict German deficits will grow further.
The German Bundesbank expects the total deficit to rise to 4.5 per cent by 2027 – owing to major debt-financed investments into infrastructure and defence announced by the federal government.
