Germany Faces €140 Billion Budget Gap Through 2029 Despite Improved Tax Outlook
Germany is confronting a budget shortfall exceeding €140 billion through 2029, Finance Minister Lars Klingbeil stated on Thursday, emphasizing that all ministries must implement spending cuts. This fiscal challenge persists even as updated projections indicate €33.6 billion more in tax revenues than previously forecast for the 2025-2029 period.
The government's €500 billion spending plan, approved in March to stimulate an economy impacted by the pandemic, has raised significant funding concerns. Although the national tax council revised its five-year revenue forecast upward by 0.7% to €5.17 trillion, this improvement only partially alleviates the fiscal pressure.
The brighter revenue outlook reduces the 2027 deficit by €7-8 billion from an earlier €30 billion estimate. However, substantial gaps remain—approximately €60 billion in 2028 and over €60 billion in 2029.
Klingbeil reaffirmed the government's commitment to a “strict course of consolidation,” with coalition party leaders expected to propose a comprehensive package by year-end to address the persistent funding gaps. He linked the improved revenue projections to a more positive economic outlook, despite Germany's economy contracting in both 2023 and 2024—the only G7 nation with two consecutive years of decline.
While the government anticipates modest 0.2% growth this year, it forecasts a stronger rebound of 1.3% in 2026 and 1.4% in 2027, partly driven by state expenditure.
(€1 = $1.17)
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