Germany’s federal budget is under mounting pressure, with the Finance Ministry now projecting a significant decline in expected tax revenues.
According to newly released figures, federal coffers will see €33.3 billion less than anticipated by 2029. When including state and municipal levels, the total projected shortfall across the public sector reaches €81.2 billion.
“We need to strengthen revenues through higher economic growth,” said Germany’s new Finance Minister, Lars Klingbeil.
Despite this call for growth-driven solutions, the country’s economic outlook remains restrained. GDP is expected to rise by just 1% in 2026, offering little relief in the near term.
The upcoming 2025 budget is expected to be hit especially hard. It already factors in tax cuts for individuals and reductions in corporate contributions — measures that further shrink the revenue base. The resulting gap poses a risk to finalizing the budget on schedule.
A revised budget plan is due to be presented by Klingbeil on June 25. The proposal will notably diverge from the version drafted by his predecessor, Christian Lindner, reflecting a shift in political priorities under the new ruling coalition.
