BERLIN, April 7 (Xinhua) -- Germany's public deficit widened sharply in 2025, reaching levels last seen during the 2022 energy crisis triggered by the Russia-Ukraine conflict, official data showed on Tuesday.
The combined deficit across federal, state, municipal and social security budgets rose to 127.3 billion euros (147 billion U.S. dollars), an increase of 22.9 billion euros (26.5 billion dollars) from a year earlier, according to the Federal Statistical Office (Destatis).
Unlike in 2022 - when the deficit was largely concentrated at the federal level due to emergency measures such as energy subsidies - shortfalls in 2025 were recorded across all levels of government, pointing to broader underlying fiscal pressures.
The widening gap was driven by a sharp rise in spending. Although public revenues continued to grow, expenditure increased at a faster pace, Destatis said. Federal government spending climbed 6.1 percent to 658 billion euros (760 billion dollars), pushing the federal deficit to 85.4 billion euros (98.7 billion dollars).
The statistical office noted that higher spending was mainly driven by increased social security transfers and military procurement, with defense-related outlays surging by roughly 25 percent in 2025.
Europe's largest economy has experienced three consecutive years of contraction or stagnation, with weak exports continuing to weigh on the recovery outlook. With limited support from external demand, the government has increasingly relied on domestic consumption, both private and public, to sustain growth.
Under the 2026 federal budget approved late last year, public spending is set to rise further in the coming years. Total federal investment is projected to reach a record 126.7 billion euros (146.4 billion dollars), targeting transport infrastructure, defense and digitalization.
However, the fiscal outlook remains under pressure. Government projections indicate a cumulative federal budget gap of 172 billion euros (198.7 billion dollars) between 2027 and 2029. ■
