The total state budget of Germany ended 2025 with the largest deficit since the beginning of the war in Ukraine during the energy crisis of 2022, reported the Federal Statistical Office in Wiesbaden on Tuesday, April 7. The deficit reached 127.3 billion euros, which is 22.9 billion euros more than the previous year. Total revenues amounted to about 2.081 trillion euros, while expenditures were about 2.208 trillion euros.
The main culprit for the increase in the deficit turned out to be the federal center: its deficit increased by 34.5 billion and reached 85.4 billion euros. The reason was the reliance on debt financing - through special funds for the Bundeswehr, infrastructure, and climate protection, fully formed from loans.
Municipalities recorded a record deficit of 31.9 billion euros: expenditures increased by 5.6 percent, while revenues increased by only 4.1 percent.
The lands and social funds have reduced losses.
The federal states and the social security system have managed to reduce the deficit. The land shortage decreased by 9.5 billion and amounted to 8.7 billion euros, with three-quarters of this amount falling on the city-states of Berlin, Hamburg, and Bremen, while five states - including Bavaria and Hesse - had budgets with a surplus.
The deficit of the social security system decreased by 9.2 billion and amounted to 1.3 billion euros - due to a 9 percent increase in insurance contributions, including an increase in additional contributions to the health insurance fund.
The growth in federal center expenditures was due to increased subsidies and loans in favor of social funds. The federation allocated 5.3 billion euros to Deutsche Bahn to increase its equity and provided a loan of 3 billion euros. A key factor in the growth of expenditures was military procurement - it increased by 23.4 percent, to 39 billion euros. The change in the accounting practice for government securities allowed for a reduction in interest expenses compared to 2024.
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