Study: Social spending doubled in the last three decades - Germany's Federal Budget Faces 172 Billion Euro Gap by 2027-2029
The German Federal Government faces a significant financial challenge in the coming years. By 2027 to 2029, the estimated funding gap is a staggering 172 billion euros. This alarming figure comes amidst a backdrop of shifting investment and social expenditure trends, and a projected aging population that could further strain the budget.
Over the past two decades, investment expenditures' share of the federal budget has fluctuated significantly. In 1992, it stood at over 15%, but by 2011, this had decreased to 9%. However, the COVID-19 pandemic and special funds led to a rise in investment expenditures, reaching 12.2%.
Social expenditures per capita have also seen a substantial increase. From 1464 euros in 1992, this figure has more than doubled to 2665 euros in 2024. Similarly, unemployment benefits per capita have tripled from 187 euros to 625 euros, and social insurance expenditures per capita have more than doubled from 755 euros to 1644 euros.
The German Federal Government's current projections indicate a fluctuating federal budget deficit, with estimates ranging from approximately 60 million euros in 2027 to about 80 million euros each year in 2028 and 2029. Given these financial pressures, tax cuts are considered unlikely. The aging population is expected to further reduce the scope of the budget, exacerbating the funding gap. The government faces a daunting task in balancing these competing demands and ensuring the sustainability of the federal budget.
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