Germany's 2025 borrowing undershoots plan as spending falls, revenues rise

By Holger Hansen and Maria Martinez

BERLIN, Jan 23 (Reuters) - Germany's net borrowing in 2025 came in well below the level set out in its budget plan, helped by lower-than-expected spending and higher-than-expected revenues, the finance ministry said on Friday.

This was the nation's first annual budget since sweeping reforms to loosen fiscal rules were passed in March last year, securing record investments to revive the economy while committing to an increase in defence spending.

Based on preliminary figures, borrowing totalled 66.9 billion euros ($78.55 billion) in the core budget, 14.9 billion euros less than budgeted, an official said, attributing the undershoot in roughly equal parts to spending "undershoots" and revenue overperformance.

In the core budget, total spending reached 495.5 billion euros, versus 502.5 billion originally planned, while revenues stood at 428.6 billion, higher than the 420.8 billion expected, according to the ministry.

Germany has thrown off decades of fiscal conservatism in the hope that public investment can kick-start the lagging economy, while a defence budget boost aims to secure military support for Ukraine and meet more ambitious spending targets for NATO members.

Total borrowing rose to 102.7 billion euros, including funds from the special infrastructure fund approved in March and from the special defence fund, according to finance ministry sources.

The figure for total borrowing is below the 142.3 billion euros originally planned, the sources said.

RECORD INVESTMENTS, BUT STILL SLOW

At 86.8 billion euros, total investments reached a record level in 2025, with 55.4 billion euros from the core budget and the rest coming from special funds.

The ministry highlighted that investment spending increased by 12.3 billion euros compared with 2024, which corresponds to an increase of 17%.

However, total investments were well below the 115.6 billion euros that had been budgeted.

"The figures show that the first investments are getting underway, but we still need more speed," German Finance Minister Lars Klingbeil said, noting that far from all investment funds had been spent in 2025. "We need to do better here in 2026."

Germany's parliament last March approved a 500-billion euro special fund for infrastructure and by the end of 2025 only 24 billion euros had been invested.

To make use of the money from the infrastructure fund more transparent, the finance ministry on Friday launched on its website an "investment clock", which shows the disbursement of funds with monthly updated figures.

($1 = 0.8517 euros)