Preliminary data released Wednesday by the Federal Statistical Office (Destatis) reveals a concerning surge in Germany’s overall public debt, raising critical questions about fiscal policy and long-term economic stability. As of the end of the second quarter of 2025, the total public debt reached €2.554 trillion, representing a 1.2% increase, or €30.6 billion, compared to the previous quarter.
This escalation in debt is largely attributed to a substantial rise in federal borrowing. The Federal Government’s debt climbed by €30.9 billion (1.8%), primarily fueled by the burgeoning “Special Fund for the Armed Forces” (Sondervermögen Bundeswehr), which saw its debt increase by a significant 9.2% – equating to €2.4 billion – reaching €28.3 billion. This expansion underscores the ongoing and escalating costs associated with re-equipping and modernizing Germany’s armed forces, a policy shift with potentially profound budgetary consequences.
While federal debt exhibited a pronounced increase, trends at the state level were more varied. Several states, including Baden-Württemberg, Lower Saxony and Saxony-Anhalt, registered declines in their debt. However, these reductions are overshadowed by escalating borrowing amongst municipalities and municipal associations. Their collective debt rose by €5.4 billion (+3.1%) to €179.8 billion, adding further strain on the national fiscal landscape. Notably, Brandenburg, Rhineland-Palatinate and Schleswig-Holstein experienced the steepest proportional increases in municipal debt.
The social security sector recorded a marginal decrease in debt, a negligible counterpoint to the broader trend of escalating public borrowing.
The latest figures ignite a renewed debate regarding Germany’s fiscal discipline and the long-term sustainability of government spending. The rapid accumulation of debt, particularly tied to security spending and municipal obligations, warrants a thorough re-evaluation of budgetary priorities and a critical assessment of the government’s ability to maintain economic solvency under mounting financial pressure. The uneven distribution of debt burdens across states and municipalities also suggests a need for greater fiscal equalization and coordinated policy responses to prevent regional economic disparities from widening. The reliance on special funds, as exemplified by the Bundeswehr fund, also raises concerns about transparency and the potential masking of underlying fiscal risks.
