Germany’s government deficit rose
Frankfurt (dap) — Germany’s government deficit rose by almost €4 billion ($4.7 billion) in 2025 despite the economy climbing out of recession, official data showed on Wednesday.
The deficit – which includes the federal government, Germany’s 16 federal states, municipalities and social security funds – increased to €119.1 billion, the Federal Statistical Office said.
As a percentage of gross domestic product (GDP), the deficit amounted to 2.7%, the same as in the previous year.
The figure was within the European Union’s 3% limit, but higher than a preliminary estimate of 2.4%.
Although social security contributions and tax revenues rose significantly, overall government spending grew faster than revenues.
Interest expenditure was also higher in 2025 than in the previous year, and spending on social security also grew, especially on pensions.
The Bundesbank, Germany’s central bank, expects the deficit ratio to rise to 4.5% by 2027 because the government is set to invest billions in roads, railways and defence.
The record expenditure, financed through an exemption from the country’s strict constitutional rules on borrowing, is expected to boost economic growth in the coming year.
Fourth-quarter GDP in 2025 was 0.3%, the agency confirmed, buoyed by rising private and government consumption, and more investment in construction.
“This meant that the economically volatile year 2025 ended with an increase in economic output,” said Ruth Brand, president of the Federal Statistical Office.
With growth of 0.2% for the full year of 2025, Germany narrowly avoided a third consecutive year of recession.
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