Preliminary figures released by the Federal Statistical Office (Destatis) reveal a significant financial deficit for core and supplementary municipal budgets and associations of municipalities (excluding city-states) in Germany during the first half of 2025. The deficit amounted to €19.7 billion, an increase from the €17.5 billion recorded in the first half of 2024 and a stark contrast to the €7.3 billion deficit in the first half of 2023.
The deficit is primarily driven by the core municipal budgets, which registered a shortfall of €19.0 billion as adjusted expenditures exceeded income. Supplementary budgets, in contrast, posted a deficit of €0.7 billion, having shown a small surplus of €35.2 million in the same period last year.
The widening gap is attributable to expenditure growth outpacing revenue increases. Overall, core and supplementary budgets saw adjusted expenditures rise by 6.9 percent, or €12.8 billion, reaching €198.7 billion in the first half of 2025. Adjusted revenues, however, increased at a slightly slower rate, up 6.2 percent or €10.5 billion, to €179.0 billion.
Expenditure increases were observed across various key categories. Personnel expenses rose by 6.3 percent to €52.0 billion, current operating costs increased by 5.6 percent to €47.6 billion and social benefits saw an increase of 6.4 percent to €44.5 billion. Capital investment also rose, up 5.5 percent to €22.6 billion. Furthermore, municipalities and associations of municipalities increased grants for current purposes to the non-public sector, such as the support of daycare centers and other facilities operated by independent organizations, by 7.9 percent to €24.1 billion. Notably, municipal interest expenses surged by 18.8 percent, reaching €2.1 billion.
Municipal and association of municipalities’ tax revenues (net) saw only moderate growth of 2.8 percent, totaling €56.5 billion compared to the previous year. Business tax revenues (net) remained largely unchanged at €31.4 billion (+0.4 percent). Conversely, revenues from administrative and usage fees increased significantly, up 8.2 percent to €25.1 billion.
Changes to reporting procedures due to the introduction of the Deutschlandticket and the resulting greater reliance on public funding for public transport, led to the inclusion of approximately 440 public transport companies into the supplementary budget reporting circle from the second quarter of 2023. This complicates direct comparisons between core and supplementary budgets for 2023 and 2024. Consequently, an isolated examination of core budgets provides a more reliable understanding of financial trends. Before the slowdown observed in 2025, core budget adjusted expenditures recorded a robust 9.2 percent increase from the first half of 2023 to the first half of 2024. The rate of increase then decelerated to 6.6 percent from the first half of 2024 to the first half of 2025. Core budget adjusted revenues, meanwhile, rose 3.4 percent from the first half of 2023 to the first half of 2024 and subsequently climbed 6.3 percent from the first half of 2024 to the first half of 2025, a faster rate attributed, in part, to the prioritization of Länder payments from the second half of 2025 into the first half of 2025.
