Economy Germany's economy grew more strongly than expected
Comparatively strong growth in the final quarter last year gave the German economy its first plus since 2022. However, the holes in the 2025 national budget are larger than initially assumed.
25.02.2026, 09:54
25.02.2026, 09:55
SDA
In relation to total economic output, the deficit of the federal government, federal states, municipalities and social security amounted to 2.7 percent, as in the previous year, according to the Federal Statistical Office on Wednesday. On a provisional basis, the authority had put the deficit for 2025 at 2.4 percent. Germany nevertheless complied with the European debt rule, which allows a budget deficit of no more than three percent.
Further increase in the deficit ratio expected
The Bundesbank expects the deficit ratio to increase to 4.5 percent by 2027 because the government wants to invest huge sums of billions in roads, railways and defense financed by debt.
In 2025, the treasury spent 119.1 billion euros more than it took in. This means that the deficit was around 4 billion euros higher than a year earlier. Although social security contributions and tax revenue increased significantly, overall government spending grew faster than revenue. Interest expenditure in 2025 was also higher than in the previous year, as was social expenditure, particularly for pensions and annuities.
Billions from the state as an economic driver
However, the billions in investments made possible by the easing of the debt brake are likely to boost the economy: Economists expect the German economy to pick up speed from the spring after a comparatively weak start to the new year.
In the fourth quarter of 2025, gross domestic product (GDP) increased by 0.3% compared to the previous quarter, as confirmed by the Federal Statistical Office. Europe's largest economy is therefore entering 2026 with a comparatively strong tailwind.
According to the statisticians, growth in the last three months of last year was primarily driven by rising private and government consumer spending. However, construction investment also increased significantly.
"The economically volatile year 2025 thus ended with an increase in economic output," said Ruth Brand, President of the Federal Statistical Office. In 2025 as a whole, Germany narrowly missed out on its third consecutive year without economic growth with an increase of 0.2 percent.
