A new analysis of the 2026 federal budget by the Federal Audit Court has delivered a stark warning regarding Germany’s fiscal policy, prompting criticism of the current approach taken by the governing coalition of the unions and the SPD. The report, obtained by Politico, asserts that the nation must curtail spending and adopt a more sustainable financial strategy.
The audit court’s assessment emphasizes the need for a fundamental shift in how the federal government manages its resources. It argues that relying solely on anticipated positive economic developments is insufficient to address the structural budget deficits. The report explicitly calls for durable savings measures, a prioritization of constitutionally mandated core responsibilities, a thorough review of existing subsidies and a strategic shift towards investments over current expenditures.
The core of the criticism centers on the federal government’s apparent inability to reliably finance essential state functions through regular revenue streams. The report highlights that plans to finance nearly one in three euros through borrowing in 2026 indicate a departure from principles of sound fiscal management. The Audit Court insists the government must implement reforms to ensure long-term financial stability and the ability to uphold core governmental duties.
