财政扩张阴影下：德国地方政府面临巨大财政困难

Germany's municipalities facing large financial difficulties SebastianBecker|SeniorEconomist/sebastian-b.becker@db.com May2026 Situation and outlook for municipal finances The key points below and the following charts are based on our German-language study 'lm Schatten der Fiskalexpansion:Deutschlands Gemeinden in groβen Finanznoten' (ln the Shadow of Fiscal Expansion: Germany's municipalities facing largefinancialdifficulties),whichwaspublishedonMay8,2026. The municipalities are in a major budget crisis, which escalated in 2025. With an aggregated financial deficit of almostEUR 32 bn, the core and extra budgets at the municipal level recorded the highest deficit since German reunification. The financial problem is a nationwide phenomenon that has affected municipalities in almost all federal states. At 0.7% ofGDP or 7.5% of expenditure, the aggregated 2025 financial deficit even surpasses previous values from the time of theglobal financial and economic crisis (2009/10) and the early 2000s. The municipalities'budget problems are notmainly cyclical;they are primarily rooted in thefederal financial system.Whilemunicipalitiesbeararound25%oftotalpublicexpenditure(excludingspendingbysocial securityfunds),theybetween assigned tasks and reimbursed costs - which is due to municipalities having been assigned an increasingnumberoftasks overtime,withouttheresulting costsbeingfullycovered. Because municipal expenditure - especially for personnel and social benefits - has soared in the last three years, whilerevenues (taxes, grants)have notkept pace, a structural budgetary imbalance has occurred. The medium-term outlook for municipalities is challenging:the financial deficit is likelyto remain high in the comingyears, and (infrastructure) investments will at best stagnate. This would further increase the already high investmentbacklog. The funds from the off-budgetary fund for infrastructure and climate neutrality (SViK) are also unlikely tosufficiently strengthen municipal investment activity. The federal government's previous aid, including funds from the SViK and participation in municipal debt relief programs,isnot sufficient to solve the structural financial problemsat the municipal level.Without substantial aid andcomprehensive reform of financial relations (e.g., higher participation in joint taxes, reform of the municipal business tax,compliancewiththefiscal correspondence principle'),a persistent crisis in municipal finances looms. In 2025, the aggregated municipal level recorded thehighest deficit since reunification The budget situation deterioratedfurther in 2025 Budgetary difficulties are awidespread phenomenon Financial balance at the municipal level,% total spending at the municipal level Financial development at the municipal level(excl. city-states)*, EUR bn After the federal government, the municipal levelshows the second-highest budget deficit Renewed increase in debt - a reflection of structuralbudget problems The debt ratio is still lower thanten years ago Municipal debt has increasedsignificantly recently Debt of the municipal level in the territorialstates*, EUR bn Debt (to the non-public sector)*, percentageshare of total municipal revenues70 Past consolidation successes could be lost again Municipal debt in theeconomically large federal states Major consolidation successesin RP and SL Municipal debt (territorial states),% revenues at the municipal level Municipal debt (territorial states),% revenues at the municipal level Municipal cash advances are heavily concentrated inNorth Rhine-Westphalia Municipal cash advances byfederalstates (2015-2025)% revenues atthe municipal level Municipal cash advances byfederal states (Q4 2025) Municipalities receive only a small share ofgovernment tax revenues Municipalities receive onlyone-seventh of tax revenues . .. but bear about a quarter ofpublic expenditures Percentage shares of the municipal level inpublic spending* Percentage shares of the municipal level ingov't tax revenues (national accounts data) Growing structural budget imbalance - expenditureshave outpaced revenues Municipal revenues* Municipal expenditures* * Core and extra budgets; according to financial statistics(accountingresults upto2022,cash statistics from2023)*includingdebtserviceassistance Expenditure growth has slowed lately - revenues aregrowing only slightly Revenues at the municipal level* Spending at the municipal level* % yoy and contributions in pp (price-adjustedbased on the GDP deflator) % yoy and contributions in pp (price-adjustedbased on the GDP deflator) *Core and extrabudgets;accordingtofinancial statistics(accountingresultsupto2022,cashstatisticsfrom2023)**includingdebtserviceassistance Sources:FederalStatisticalOffice,DeutscheBankResearch Interest expenditure is rising again, not least due tothe higher interest rate level Interest expenditure is stillrelatively low Interest expenditure of municipal core and extrabudgets (f