Audit Court: Federal Republic of Germany's Administrative Body
In a stark warning, the Federal Audit Office has raised concerns about the 2026 budget draft, suggesting that the federal government's spending patterns could lead to a debt spiral. Finance Minister Lars Klingbeil, from the Social Democratic Party (SPD), is set to introduce this budget in the Bundestag next week.
The report highlights that the majority of the 2026 expenditures, around 520 billion euros, are planned to be financed through loans. In the core budget alone, Klingbeil plans to take on debts of nearly 90 billion euros, with an additional 84 billion euros in loans from special funds. This adds up to a total of approximately 174 billion euros in new debts for the year 2026.
The concern lies in the fact that in the medium term, a significant portion of the federal budget could be tied up in interest payments. The report criticizes the plan for not permanently financing core state tasks from revenues, stating that, in the future, core state tasks could no longer be financed from revenues.
The Federal Audit Office's criticism emphasizes the issue of the federal government's unsustainable spending patterns. The report also highlights the issue of the federal government's inability to match its rising spending with an equally growing capacity to perform. Rising federal spending is not matched by an equally growing capacity to perform by the federal government, according to the report.
The Federal Audit Office has accused Finance Minister Lars Klingbeil of driving the federal government into a debt spiral. The office criticizes Klingbeil's plan to finance approximately one-third of the 2026 budget on credit, stating that new debts are a short-term solution that reduces reform pressure.
The 2026 budget draft has been criticized for not addressing the structural issue of the federal government living beyond its means. The Federal Audit Office's report on the 2026 budget draft is critical of the federal government's financial management, and the report on the draft states that the federal government is structurally living beyond its means.
The Federal Audit Office's warning comes at a crucial time, as the federal government faces numerous challenges in the upcoming years. It remains to be seen how the government will respond to these criticisms and whether changes will be made to the 2026 budget draft before it is presented in the Bundestag.
