Following the Stability Council meeting, Federal Finance Minister Lars Klingbeil (SPD) defended the massive federal investments against criticism from his state counterparts. Speaking after the Council’s 36th session on Monday, Klingbeil stated, “We see signs of a new upswing in Germany. Our investments are boosting the economy again. This shows that it is correct that we are spending a lot of money on infrastructure and defense right now.”
The SPD politician added that Germany is attempting to “catch up in the shortest possible time” for what he described as a failure that has lasted “for decades.” He noted that the Council’s current figures reflect what the Bundestag and Bundesrat have enabled through legislative changes regarding the special fund and the exception for defense spending, which bypass the debt brake. Despite this, Klingbeil confirmed that finances remain under close scrutiny, assuring that “we will consistently continue the consolidation course in the federal budget to ensure we have room for maneuver in the future.”
However, state politicians offered a more critical view. Bremen’s Finance Senator, Björn Fecker (The Greens), argued that projections for the total state deficit are “more worrying than last year.” Fecker warned that even if defense expenditures are excluded, the 3 percent limit is likely to be exceeded this year and in the foreseeable future. He attributed this trend to the “continuous and disproportionate growth of the federal budget” and the woes of local municipalities.
The Green politician expressed “great concern” over the situation, emphasizing that many municipalities can now only fulfill parts of their core duties inadequately. Fecker also pointed to the growing Maastricht debt ratio, which is projected to climb to almost 80 percent of GDP by 2030. In light of this, he asserted that defense spending urgently needs to be financed prospectively outside of regular budget revenues; otherwise, the sustainability of public budgets will be threatened by extremely high interest costs.
Fecker also suggested that rapid implementation of investment projects under the special fund for infrastructure and climate neutrality could help alleviate the financial situation of states and municipalities. He stressed that targeted reforms are necessary, particularly given the huge increases in social spending, and noted that federal tax cuts particularly strain local authorities. Further action is needed to resolve the chronic municipal debt issue, and he argued that a reform of the inheritance tax is overdue from a fairness perspective.
Similarly, North Rhine-Westphalia’s Finance Minister, Marcus Optendrenk (CDU), suggested that the federal, state, and municipal levels can only afford expenditures that revitalize the economy. Optendrenk stated that every euro must be measured by whether it stimulates growth or merely finances the current moment, arguing that everything else must take a backseat. He maintained that the impetus for expenditure growth lies not in investments, but in performance laws, where reforms must take place. He highlighted that “the best consolidation contributions cost us nothing,” pointing to eight concrete proposals submitted earlier this month by NRW that aim to streamline bureaucracy and strengthen the location without incurring new debt.
The Stability Council, established in 2010, is mandated to prevent financial crises in Germany. This body, which succeeded the Financial Planning Council, oversees the budgetary conduct of both the federal government and the states. It comprises the Federal Finance Minister, the relevant state finance ministers, and the Federal Minister of Economics, and is chaired by the President of the Finance Minister Conference of the States. The Council meets at least twice a year to make its decisions.
