German Municipalities Face Major Financing Deficit in H1 2025
German municipalities and associations experienced a mixed financial scenario in the first half of 2025. While core and supplementary budget revenues climbed, so did expenditures, leading to a substantial financing deficit.
The total revenue from core and supplementary budgets rose by 6.2 percent to 179.0 billion euros compared to the same period last year. However, expenditures increased even more, by 6.9 percent to 198.7 billion euros. This resulted in a financing deficit of 19.7 billion euros, primarily driven by core budgets, which had a deficit of 19.0 billion euros.
Looking at the specifics, adjusted revenues of core budgets increased by 6.3 percent, while adjusted expenditures rose by 6.6 percent. Revenues from administrative and user charges grew significantly by 8.2 percent to 25.1 billion euros. Tax revenues (net) rose moderately by 2.8 percent. Supplementary budgets ended with a deficit of 0.7 billion euros, and municipal interest expenditure surged by 18.8 percent to 2.1 billion euros.
Despite increased revenues, German municipalities and associations grapple with a substantial financing deficit in the first half of 2025. The rise in expenditures, particularly municipal interest expenditure, has significantly contributed to this gap. The impact of the Germany Ticket and increased public subsidies on budget reporting remains uncertain.
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