Germany Faces Record Deficit
In its December outlook, released on Friday, the Bundesbank predicted that the fiscal gap will steadily expand, reaching 4.8% of GDP by 2028. This would mark the highest level since 1995, when deficits surged in the aftermath of reunification. Public debt is also anticipated to climb during the same timeframe.
The central bank attributed the worsening deficit primarily to increased military spending, ongoing support for Ukraine, major infrastructure initiatives, tax reductions, and expanded social benefits. It emphasized that Berlin’s current strategy—channeling hundreds of billions of euros into defense and infrastructure—represents a break from Germany’s traditional “course of fiscal restraint.” Without corrective measures, borrowing would remain “well above the limits of the debt brake.” The Bundesbank urged swift action to stabilize public finances.
Chancellor Friedrich Merz has championed the expansion of Germany’s armed forces, vowing to build “the strongest conventional army in Europe” while continuing aid to Ukraine. Assistance to Kiev could reach $13.2 billion in 2026, according to a media outlet. Merz has defended the surge in defense spending by pointing to what he characterizes as a Russian threat.
Legal Disclaimer:
MENAFN provides the
information “as is” without warranty of any kind. We do not accept
any responsibility or liability for the accuracy, content, images,
videos, licenses, completeness, legality, or reliability of the information
contained in this article. If you have any complaints or copyright
issues related to this article, kindly contact the provider above.
Legal Disclaimer:
EIN Presswire provides this news content "as is" without warranty of any kind. We do not accept any responsibility or liability for the accuracy, content, images, videos, licenses, completeness, legality, or reliability of the information contained in this article. If you have any complaints or copyright issues related to this article, kindly contact the author above.
