State deficit increases slightly in 2025 - Deficit ratio remains at 2.7 percent - Germany's 2025 budget deficit swells to €119.1 billion amid rising spending pressures
Germany's public finances showed mixed results in 2025, with spending rising faster than revenue. The overall budget deficit reached €119.1 billion, slightly higher than the previous year. While some areas saw improvements, others faced growing financial strain.
Government spending climbed by 5.6 percent to €2.26 trillion, outpacing revenue growth. Tax revenues increased by 3.5 percent to €1.03 trillion, driven by higher value-added tax, income, and wealth tax collections. Total revenue for 2025 rose by 5.7 percent to €2.14 trillion, largely due to an 8.9 percent jump in social security contributions.
Gross investment surged by 10.3 percent, boosted by infrastructure funding and higher defence spending. Despite this, the federal government's deficit grew to €79.6 billion, accounting for two-thirds of the public sector's total shortfall.
At the regional level, Germany's states cut their deficits by more than half, dropping from €21.6 billion in 2024 to €9.8 billion in 2025. Social insurance funds also reduced their shortfall sharply, from €11.8 billion to €1.7 billion. However, local municipalities saw their budget gaps widen, rising from €21.0 billion to €28.1 billion.
The overall deficit-to-GDP ratio remained steady at 2.7 percent for both years.
The 2025 figures highlight contrasting trends across Germany's public finances. While federal and state deficits grew or persisted, social insurance funds and some regions managed to reduce their shortfalls. The overall deficit rose slightly, reflecting ongoing pressure on spending and revenue balance.
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