Audit Court: Federal Republic of Germany Administration
The Federal Court of Auditors has raised concerns about the long-term financial stability of the federal government, accusing Finance Minister Lars Klingbeil of driving the government into a debt spiral.
The court's report on the 2026 budget draft states that the federal government is not financially sustainable. It criticises a plan to finance approximately one-third of the 2026 budget on credit, with Klingbeil planning debts of almost 90 billion euros in the core budget for 2026.
The total new debts planned by Klingbeil amount to around 174 billion euros. This includes additional loans of more than 84 billion euros from special funds. The report indicates that the federal government's spending is unsustainable in its current structure.
The court warns that new debts are a short-term solution and reduce reform pressure. It predicts that in the medium term, a significant portion of the federal budget will be allocated for interest payments.
The report suggests that the federal government is not able to cover its rising spending with a growing performance capability. This is echoed in the court's statement that the federal government is structurally living beyond its means.
Moreover, the report states that state core tasks cannot be permanently financed from revenues. This is a significant concern, as the court believes that the 2026 budget draft does not ensure the permanent financing of state core tasks from revenues.
The court of auditors has also mentioned the risk of a debt spiral in relation to Klingbeil's proposed budget. This warning comes as Klingbeil plans to submit this budget to the Bundestag next week.
The concerns raised by the Federal Court of Auditors are a cause for concern, as they suggest that the current budget planning may lead to long-term financial instability for the federal government. It remains to be seen how these issues will be addressed in the coming weeks.
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