Germany's Fiscal Strategy: A New Era of Budget Surplus and Investment

Germany's 2025 budget borrowing was lower than planned due to reduced spending and increased revenues, marking the first budget year since easing fiscal rules. This led to significant public investments and higher defense spending to support Ukraine and meet NATO goals, with overall borrowing below projections.

Germany's net borrowing for 2025 has come in significantly below the planned budget, thanks to decreased spending and increased revenues, the finance ministry announced Friday.

This is Germany's first annual budget since enacting major fiscal rule reforms in March 2024, paving the way for record public investments and enhanced defense expenditure. Preliminary figures show a borrowing total of 66.9 billion euros, significantly below the expected 81.8 billion euros.

In efforts to revive the economy and reinforce its military commitments, Germany has shifted from traditional fiscal conservatism, resulting in total borrowing rising to 102.7 billion euros, despite initial plans estimating 143.2 billion euros.

(With inputs from agencies.)