The financial situation in German municipalities is rapidly deteriorating. According to the Federal Statistical Office, in 2024, the budget deficit of cities and municipalities reached a record €24.8 billion—the highest level since Germany’s reunification in 1990. For comparison, in 2023, the deficit stood at €6.6 billion.
The main driver of the crisis is a sharp increase in expenditures, particularly on social needs. Total municipal spending rose by nearly €30 billion, reaching €362.7 billion.
The most significant increase was recorded in social benefits, which grew by 11.7% to €84.5 billion. Additionally, spending on child and youth welfare increased by 17.1%, integration services by 13.6%, and support for asylum seekers by 3.3%.
Personnel costs also surged—by 9%, reaching €88.1 billion. This was driven by rising wages and workforce expansion. However, municipal revenues are failing to keep pace with expenditures: in 2024, they increased by just 3.5%, totaling €338.5 billion.
Tax revenues saw a particularly noticeable slowdown, with growth dropping to 1.5% (€132.1 billion) after a strong rise in previous years.
