Anticipated federal debt accrual in 2025 may exceed initial estimates.
As reported by various media outlets, the federal government's projected borrowing for next year is anticipated to surpass initial expectations. According to "Der Spiegel", Finance Minister Christian Lindner is planning a net credit intake of 56.5 billion euros, a 5.2 billion euro increase from the government's previous budget estimates. This increase is made possible by a higher debt brake limit due to the weak economy.
The revised figures are based on the government's autumn forecast, presented by Economics Minister Robert Habeck (Greens) on Wednesday. According to this new forecast, the economy is expected to contract by 0.2% this year, a downgrade from the previous spring forecast of a 0.2% growth.
"Der Spiegel" reports that the increased borrowing is intended to cover cyclical revenue shortfalls in taxes and higher expenditures related to unemployment. However, the existing budget deficit of 12 billion euros will not be reduced. The "Bild" newspaper also reported on the anticipated higher debt increase, mentioning an additional new borrowing of 5.2 billion euros.
The permissible net credit intake, as dictated by the debt brake, includes a cyclically independent deficit of 0.35% of annual economic output. According to "Der Spiegel", this currently amounts to 14.4 billion euros according to the government's calculations. Additionally, there is a cyclical component of currently 15 billion euros, most of which was already accounted for in the previous budget planning.
Lindner also plans debt-financed financial transactions totaling 27.1 billion euros. These transactions are not included in the debt brake calculations because they are offset by an equivalent increase in assets. This includes, for example, an increase in equity for the railway and payments for the generation capital planned by Lindner as an additional capital-funded component of the statutory pension.
The government is increasing its borrowing to cover cyclical revenue shortfalls in taxes and higher expenditures related to unemployment, as reported by "Der Spiegel". Despite this increase, the existing budget deficit of 12 billion euros will not be reduced.
