Public Spending in Germany Surpasses Two Trillion Euros Amid Rising Deficits

Germany’s Public Expenditures Reach Historic High

Germany’s public sector expenditures exceeded two trillion euros in 2024 for the first time, according to data released by the Federal Statistical Office (Destatis). This marks a significant development in the country’s fiscal history. Total spending by the federal government, states, municipalities, and social security institutions increased by 7.1 percent compared to 2023, amounting to 2.08 trillion euros. Meanwhile, total revenues grew by 6.8 percent, reaching 1.98 trillion euros.

Despite stable growth in revenues from taxes and social contributions, the increase in income was not sufficient to match the pace of rising expenditures. As a result, Germany’s overall public budget recorded a financial deficit of 104.4 billion euros, which is 12.7 billion euros higher than the previous year.

Federal Government Reduces Its Deficit

A closer look at the numbers shows that the federal government managed to slightly improve its fiscal position. Revenues rose significantly by 8.1 percent to 569 billion euros, while expenditures increased modestly by 1 percent to 620 billion euros. This led to a federal deficit of 50.9 billion euros—lower than the 87.6 billion euros recorded in 2023.

The improvement at the federal level contrasts with a more troubling picture in the lower administrative tiers. The federal government also bore increased costs in military spending, especially through its special Bundeswehr fund, where expenditures rose to 16.9 billion euros. Though the core defense budget decreased slightly compared to the previous year, the overall allocation to defense remained high.

States and Municipalities Deep in Red

Germany’s states and municipalities experienced a different trend. State-level revenues rose by 2.8 percent to 544.1 billion euros, but expenditures grew more rapidly by 6.2 percent, reaching 562.4 billion euros. This generated a deficit of approximately 18.2 billion euros, a significant increase from just 100 million euros the year before.

Only three federal states—Lower Saxony, Saxony, and Rhineland-Palatinate—reported a budget surplus in 2024. All other states ended the year with deficits, some of them substantial.

Municipal governments were hit even harder. Their revenues climbed by 7.6 percent to 376.1 billion euros, but spending surged by 12.6 percent to 400.9 billion euros. This resulted in a municipal-level shortfall of 24.8 billion euros, up from 6.6 billion euros in 2023. The rise in spending is largely linked to increased social responsibilities and local infrastructure investments.

Social Security Also in Deficit

The social security system also ended 2024 with a negative balance. Revenues rose by 5.3 percent to 864.1 billion euros, while expenditures climbed by 6.9 percent to 874.6 billion euros, leading to a deficit of 10.5 billion euros. Although this gap is smaller compared to those of other public sectors, it still signals growing pressure on Germany’s social safety nets.

Destatis highlighted that the rising costs in this area are largely attributed to expanded social benefit programs. Much of this additional funding was distributed by the federal government to the states through increased financial allocations. In total, such transfers rose by 3.3 billion euros over the previous year.

Public Debt Grows Despite Strong Revenues

While some revenue growth provided temporary relief, the expanding deficits across multiple layers of government have contributed to a general rise in public debt. According to Destatis, all components of Germany’s public finance structure—federal, state, municipal, and social—contributed to the overall increase in liabilities.

The ongoing fiscal pressure is driven by various factors, including inflation, higher energy prices, demographic changes, defense commitments, and the increasing financial burdens of social policies. Even as top earners contribute a significant portion of tax income, the rising cost of maintaining public services has proven difficult to contain.

Fiscal Imbalance Raises Policy Questions

The report has reignited public discussion about the sustainability of current fiscal policies. Experts warn that while targeted social investment and military preparedness are important, the long-term impact of structural deficits across all government levels must be addressed.

Municipalities, in particular, face growing challenges in managing local services, housing programs, and infrastructure development. At the same time, the uneven fiscal performance between federal and subnational entities raises questions about financial redistribution and federal solidarity mechanisms.

Whether through reforms, spending cuts, or changes in taxation, policymakers are expected to respond to the data in the months to come. However, the current figures confirm a trend of widening fiscal gaps that will demand serious attention.