Growing fiscal challenges are emerging for Finance Minister Lars Klingbeil, according to sources within the German government. Preliminary estimates indicate that the shortfall in the latest financial planning is widening by a low double-digit billion-euro amount, pushing the total deficit to exceed €150 billion.
This revised projection represents a significant increase from the previous financial plan unveiled in June, which anticipated a budget gap of €144 billion for the years 2027 to 2029.
The escalating deficit is reportedly attributable to recent compromises made by the governing coalition. Agreements to accelerate the implementation of a new parental benefit program to 2027, alongside increased financial commitments to state and local governments, are creating significant strains on the financial planning.
Minister Klingbeil’s upcoming financial plan, to be presented to the cabinet next Wednesday, is expected to forecast over €1 trillion in new debt. The previous financial plan for 2025 to 2029 already projected a net borrowing requirement of €846.9 billion. Government sources indicate that in 2030 alone, new debt will surpass €150 billion, primarily due to exceptions made for defense spending related to the debt brake and funding from a dedicated infrastructure fund. This would bring the total net borrowing for the period 2025 to 2030 to well over €1 trillion.
