Germany's government deficit increases to 71.3 billion euros in 1

Press release No. 305 of 25 August 2026

• Largest increase in debt recorded for central government – slight decline in local government deficit
• Expenditure outpacing receipts despite increased revenue from taxes and social contributions

WIESBADEN – The financial deficit (net borrowing) of general government amounted to 71.3 billion euros in the 1^st half of 2026 according to provisional calculations. The Federal Statistical Office ( Destatis ) also reports that the general government deficit was therefore 36.6 billion euros higher than in the same period of the previous year. Measured as a percentage of gross domestic product (GDP) at current prices, the deficit ratio was 3.1% in the first six months of 2026. Under the Maastricht Treaty, the reference value for government deficit is set at 3% of GDP.

The results are based on the definitions of the European System of Accounts (ESA) 2010. They provide the basis for monitoring the budget situation in EU Member States in accordance with the Stability and Growth Pact (Maastricht criteria) and do not correspond to the financial balance of the overall public budget as defined for finance statistics. Only limited conclusions for the annual result can be drawn from the results for the first six months.

Sharp increase in financial deficit of central government

The financial deficit of general government in the 1^st half of 2026 was due in large part to the financial deficit of central government (48.1 billion euros). The deficit of central government increased by 29.0 billion euros compared with the same period of the previous year, with expenditure rising faster than revenue. Compared with the same period a year earlier, the Länder also recorded a deficit increase, of 3.5 billion euros, which brought their deficit to 6.5 billion euros in the 1^st half of 2026. By contrast, the deficit of local government fell by 1.5 billion euros to 14.8 billion euros compared with the first six months of 2025. Social security funds posted a deficit of 1.8 billion euros, after reporting a surplus of 3.8 billion euros in the 1^st half of 2025. This was due, in particular, to higher expenditure in the area of statutory health and long-term care insurance.

Social contributions rising faster than tax revenues

In the 1^st half of 2026, general government revenue as defined in national accounts amounted to 1,073.2 billion euros. The 2.8% increase from the same period a year earlier was primarily driven by growth in social contributions, with revenue from social contributions up 4.6% compared with the 1^st half of 2025.

By contrast - compared with the same period of the previous year - the increase in current tax revenue only stood at 1.9%, although VAT receipts registered an above-average increase of 2.6%. The decline in capital transfers received is due to a base effect with regard to revenue from inheritance tax. Inheritance tax revenue was exceptionally high in the 1st half of 2025 and registered a decline of 2.7 billion euros to 6.1 billion euros (-30.4%) in 2026 compared with the same period a year earlier.

General government expenditure outpacing revenue

In the 1^st half of 2026, general government spending as defined in national accounts increased by 6.1% to 1,144.5 billion euros, and thereby outpaced growth in government revenue. While social benefits other than social transfers in kind rose by 5.2% to 389.0 billion euros, social benefits in kind increased by 8.2% to 222.5 billion euros. Other reasons for this development include higher spending on subsidies, capital transfers and an increase in current transfers.

Compared with the same period of 2025, subsidies paid in the 1^st half of 2026 rose by 10.1% to 25.8 billion euros. In the first six months of 2026, federal funds, in particular, went towards funding research projects on the production of energy from renewable sources and research into battery technology. At the same time, a federal subsidy was paid for transmission grid fees. Compared with the same period a year earlier, investment grants rose by 19.8% to 27.5 billion euros. Expenditure from the Special Fund for Infrastructure and Climate Neutrality and higher payments to multilateral development banks were particular contributors to this development. The remaining current transfers rose by 11.8% to 47.4 billion euros and include the grant scheme for electric vehicles introduced in 2026. Compared with the 1^st half of 2025, interest payments increased by 11.6% to 27.3 billion euros.

Methodological notes:

Deviations between the financial balance (net lending/net borrowing) of general government as defined in national accounts and the financial balance of the overall public budget as defined for finance statistics are due to methodological differences. Detailed information is provided on the "Deficit calculation" page (only in German) on the website of the Federal Statistical Office.

More information:

For further results regarding the revenue and expenditure of general government and the monitoring of the budget situation in the European Union (EU), including the deficit and debt ratios of the EU Member States, please refer to the tables on the EU Stability Pact provided on the “National accounts, domestic product” page on the website of the Federal Statistical Office.

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