Germany – New debt gives the economy a boost

The German government plans to take on new debt amounting to €143 billion this year, with even higher deficits planned for the coming years.

Dr Ralph Solveen

Commerzbank Economic Research

06/24/2025

A closer look at the details reveals that only part of this will be used for additional investment. This casts doubt on whether the additional spending made possible by the new debt will actually improve the competitiveness of the German economy in the end. However, it will give the economy a significant boost next year at the latest, helping the German economy to grow noticeably in the coming year.

Constitutional amendments facilitate agreement on federal budget

Today, the German government approved the draft federal budget for the current year. It is to be passed by the Bundestag in September. This puts the new coalition one step ahead of its predecessor, which collapsed over a dispute about this year's budget.

A look at the figures published today shows that the new government has made its work much easier by amending the constitution in the spring before taking office. The Federal Minister of Finance is planning new federal debt of €143 billion, which is about twice as much as the previous government had envisaged in its draft. Further new debt is planned for the following four years.

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