Preliminary calculations indicate that the German state’s financing deficit reached €71.3 billion in the first half of 2026. According to the Federal Statistical Office (Destatis), this figure represents a significant increase of €36.6 billion compared to the same period last year.
When measured against the Gross Domestic Product (GDP) at current prices, the deficit for the first half of 2026 stands at 3.1 percent. This is noteworthy because the Maastricht Treaty sets the reference target for the national deficit at three percent of GDP.
The data presented adhere to the European System of Accounts (ESA 2010) and serve as the basis for monitoring the budgetary situation of EU member states under the Stability and Growth Pact criteria. However, it is important to note that this data is not identical to the financial balance of the Public General Budget, and statisticians caution that these initial results allow only limited projections regarding the annual outcome.
The overall state deficit in the first half of 2026 is largely attributable to the deficit recorded by the federal government (48.1 billion euros), which had increased by 29.0 billion euros from the previous year, driven by a stronger rise in expenditures relative to revenues. At the state level (Länder), deficits also grew by 3.5 billion euros compared to the previous period, bringing the total for the first half of 2026 to 6.5 billion euros. In contrast, municipalities reduced their deficit by 1.5 billion euros from the previous year, with their total reaching 14.8 billion euros. Separately, social insurance recorded a deficit of 1.8 billion euros, a sharp reversal from the 3.8 billion euro surplus achieved in the first half of 2025, mainly due to higher costs in statutory health and long-term care insurance.
Regarding revenues, the state collected €1,073.2 billion in the first half of 2026, representing a 2.8 percent increase year-on-year. This growth was primarily powered by increases in social contributions, which rose by 4.6 percent. In contrast, current tax revenues only increased by 1.9 percent year-on-year, although Value-Added Tax (VAT) revenues grew above average by 2.6 percent. The decline in received asset transfers was linked to a baseline effect in inheritance tax revenue; these revenues were exceptionally high in the first half of 2025 and subsequently saw a substantial decrease of 30.4 percent, falling by 2.7 billion euros to 6.1 billion euros in 2026.
State expenditures, measured under ESA, climbed by 6.1 percent to €1,144.5 billion in the first half of 2026, growing faster than revenues. Among these increases, monetary social benefits rose by 5.2 percent to 389.0 billion euros, while social in-kind benefits grew by 8.2 percent, reaching 222.5 billion euros. Further contributors to the overall rise included higher spending on subsidies, asset transfers, and running transfers.
Subsidies increased by 10.1 percent compared to the previous year, reaching €25.8 billion. During the first half of 2026, federal funds supported research projects for renewable energy sources and battery technology research, alongside grants for transmission network costs. Investment subsidies saw a rise of 19.8 percent, amounting to €27.5 billion. This increase was driven specifically by spending from the special fund for infrastructure and climate neutrality, as well as higher commitments to multilateral development banks. Other running transfers increased by 11.8 percent to 47.4 billion euros, incorporating the electric vehicle subsidy system introduced in 2026. Finally, interest expenses rose by 11.6 percent compared to the first half of 2025, reaching €27.3 billion.
