The German economy is waking up. Tax revenues are expected to be higher next year and increase until 2029, according to the German Finance Ministry. The tax revenues of the Bund, the Länder and the municipalities will experience a surplus of around €33.6 billion between 2025 and 2029 compared to the previous estimate from May, according to figures reported by the ministry. This improvement almost exclusively benefits the Länder and the municipalities.
For the Bund, after the slight increases planned for the next two years, revenues should be lower than previous forecasts from 2028. This is explained by the tax cuts voted by the right-left coalition government of conservative Friedrich Merz to revive weakened growth.
“A little respite”
Germany voted in the spring to spend billions in additional spending to modernize its infrastructure and strengthen its defense, using a specific fund that allows it to bypass strict debt brakes.
The message is clear to the coalition partners: “the task of closing the gap (in 2027) remains pending” and all ministries “will now have to redouble their efforts to achieve this”, warned Lars Klingeil. Germany is emerging from two years of GDP contraction and forecasts point to a virtual stagnation of the economy this year, according to the Bundesbank, before a modest reactivation expected in 2026 (+0.7%) and more clearly in 2027 (+1.2%).
Source: BFM TV
