A triple whammy for public finances
The public finances of the major eurozone countries will face three challenges in the coming years:
Commerzbank Economic Research
07/11/2025
German public deficit is rising...
As shown by the federal budget for 2025 and the financial planning for the following years presented to the Bundestag this week, the federal government intends to significantly increase its spending and finance this by taking on additional huge amounts of debt. If the plans are implemented as proposed, the deficit ratio would probably be slightly above 4% of GDP in the coming years.
In the end, the shortfall could be even higher. This is because the coalition partners want to reform, i.e. relax, the debt brake again. If they succeed, the coalition will certainly make use of the additional financial leeway this will create, as despite the planned debt splurge, there are considerable gaps in the financial planning for the years from 2027 onwards. One thing is clear: Germany's debt ratio will rise massively in the coming years.
... but the budgets of other eurozone countries are also under pressure
Germany is not alone among the eurozone countries in facing this prospect. The national budgets of the other large eurozone countries will also be confronted in the coming years – to varying degrees – with the burdens that are at least partly responsible for the additional German government debt: higher defense spending, rising interest charges, and unfavorable demographic trends.
For full text see attached PDF-Version.
