Audit Court: Federal Republic of Germany's Judicial Branch
Federal Government's Financial Situation Under Scrutiny
The draft budget for 2026, set to be presented by Federal Finance Minister Lars Klingbeil (SPD) to the German Bundestag next week, has raised concerns about the long-term financial stability of the federal government. According to the Federal Court of Auditors, the budget suggests a structurally unsustainable financial situation.
The report, which evaluates the draft budget, indicates that the federal government's expenditure is outpacing its ability to generate income. Rising federal spending is not matched by a similarly growing capacity to perform by the government, the report states.
The report further suggests that the federal government is relying on debt to finance its operations. In 2026, Finance Minister Klingbeil plans expenditures of around 520 billion euros. To cover these expenses, the core budget for 2026 will incur debts of almost 90 billion euros, according to the report.
The Court of Auditors criticizes a plan to finance approximately one-third of expenditures in 2026 through credit. The report also warns that in the medium term, a significant portion of the federal budget will be tied up in interest payments.
The Court of Auditors' concerns about the long-term financial stability of the federal government remain unaddressed in the draft budget for 2026. The report highlights the risk of a debt spiral due to the planned high levels of debt in 2026.
The federal government plans to take up more than 84 billion euros in loans from special funds in 2026, adding to the overall debt. The Court of Auditors warns that new debts are only a short-term solution and reduce reform pressure.
The Federal Court of Auditors' report on the draft budget for 2026 also highlights the structural fiscal issues of the federal government. The report states that core state tasks cannot be permanently financed from income, and the draft budget does not ensure the permanent financing of these tasks.
The report goes on to accuse Finance Minister Lars Klingbeil of driving the federal government into a debt spiral. The Court of Auditors' warning comes as Finance Minister Klingbeil prepares to present the budget for 2026 to the Bundestag during the budget introduction speech on Tuesday, September 23, 2025.
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