UPDATE 1-Germany's tax experts cut revenue forecast, adding pressure on strained budget

Germany's council of ​tax experts on Thursday ‌cut its ​forecast for the country's tax revenues in the 2026-2030 period by 87.5 billion ‌euros ($103 billion) compared with its October estimate, adding to the fiscal pressure on a government already grappling with budget gaps, an energy shock from ‌the war in Iran and rising defence costs. The panel now expects ‌federal tax income in 2027 of about 395 billion euros, around 10.1 billion euros less than in its October projection.

Germany's council of ​tax experts on Thursday ‌cut its ​forecast for the country's tax revenues in the 2026-2030 period by 87.5 billion ‌euros ($103 billion) compared with its October estimate, adding to the fiscal pressure on a government already grappling with budget gaps, an energy shock from ‌the war in Iran and rising defence costs.

The panel now expects ‌federal tax income in 2027 of about 395 billion euros, around 10.1 billion euros less than in its October projection. Finance Minister Lars Klingbeil said the ⁠forecast ​showed how much economic ⁠damage the Iran war was causing.

"Trump's irresponsible war and the resulting ⁠global energy price shock are temporarily slowing down the positive economic momentum," he ​said in a statement. The downgrade comes a week after the ⁠government approved key targets for the 2027 budget, which already foresees 196.5 billion euros ⁠in ​new borrowing and a jump in defence spending to 3.1% of GDP, alongside record investment in transport, digitalisation and hospitals.

With ⁠2026 economic growth forecast at just 0.5% and unemployment above 3 ⁠million, lower ⁠tax revenue expectations are likely to complicate the coalition government's efforts to agree on tax, welfare and spending ‌reforms. ($1 = ‌0.8496 euros)