The public overall budget had higher revenue and greater expenditure in the first half of 2026 compared to the first half of 2025. Total revenues reached 1,011.8 billion euros against expenditures of 1,110.6 billion euros. As reported by the Federal Statistical Office (Destatis) on Friday based on quarterly cash statistics, all levels of the public overall budget experienced a deficit in the first six months of 2026.
The combined core and extra budgets of the federal government (Bund), states (Länder), municipalities (Gemeinden), and social insurance accounted for a total financing deficit of 98.8 billion euros in the first half of 2026, significantly higher than the 58.5 billion euros recorded in the same period of 2025. The Bund contributed the largest share to the overall deficit, and the deficit for municipalities and local associations remained at the high level observed in the previous year.
In terms of income, the two main revenue streams-taxes and revenue from economic activity-developed similarly to the overall income, showing growth of +2.3% and +1.3%, respectively, in the first half of 2026 compared to the previous period. However, the Bund saw a 3.1% decline in tax revenue. This reduction stemmed from two relief measures implemented since January 1, 2026: the lowering of the electricity tax for industrial and agricultural businesses, and the reduction of the energy tax on fuels (the “gas pump discount”) in May and June 2026. Coupled with a sharp drop in tobacco tax revenue following the increase of the tobacco tax on January 1, 2026, the Bund generated approximately 3.3 billion euros less than in the comparable period of the previous year.
While the tax revenues of the states and municipalities were not affected by these specific effects, they remained near last year’s levels, growing by +1.1% and +0.9%, respectively. The only area showing substantial growth was social insurance, which recorded a clear increase in contribution revenues of +4.6%.
On the expenditure side, rising interest costs weighed heavily on the budgets of the Bund, states, and municipalities in the first half of 2026. This resulted in a 21.2% increase in overall public spending compared to the first half of 2025, reaching 31.2 billion euros.
Capital investments (spending on construction and acquisition of assets) stagnated at 43.1 billion euros, matching the previous year’s figures (0.0% change). Although capital investments rose by 4.6% at the federal level and 3.1% at the state level, municipalities recorded a 4.5% decrease.
The expenditures of the Bund rose by 9.8% compared to the first half of 2025, reaching 325.5 billion euros. Conversely, the Bund’s revenues decreased by 5.0% to 253.1 billion euros. This deficit of 72.3 billion euros for the Bund in the first half of 2026 dwarfs the 30.0 billion euro deficit reported in the corresponding period of 2025, more than doubling the shortfall.
At the state level (Länder), revenues of 284.3 billion euros (+2.7%) met expenditures of 290.6 billion euros (+4.1%), resulting in a deficit of 6.3 billion euros (up from 2.4 billion euros in the first half of 2025). Nevertheless, Bavaria, Saxony, Schleswig-Holstein, and Thuringia reported surpluses for the first half of 2026.
For municipalities and local associations, income and expenditures grew almost proportionally (+3.0% to 184.0 billion euros for income, and +2.7% to 204.1 billion euros for spending). Consequently, the municipal financing deficit remained at 20.1 billion euros, matching the record level set in the first half of 2025, which had the highest value for a first half-year since German reunification in 1990.
Social insurance reported a nearly balanced financing balance, registering a deficit of only 68 million euros. Total revenues (491.3 billion euros) increased by 8.4%, slightly outpacing expenditures (491.4 billion euros), which rose by 6.9%. Revenue figures included 10.2 billion euros in loans from the Federal government, which supported the Federal Employment Agency (6.3 billion euros), the Nursing Care Insurance (1.6 billion euros), and the Health Fund counting towards health insurance (2.3 billion euros). As a result, the health and unemployment insurances posted surpluses (+2.7 billion euros and +1.7 billion euros, respectively) in the first half of 2026, while the pension and nursing care insurances recorded deficits (-4.7 billion euros and -0.7 billion euros).
