25th Statement of the Independent Advisory Board to the Stability Council

25th Statement of the Independent Advisory Board to the Stability Council

The Independent Advisory Board to the Stability Council (Unabhängiger Beirat des Stabilitätsrats)External link, of which Silke Übelmesser is a member,  published a Statement about the structural government budget deficit.

The main points of the statement are briefly outlined below.

• The Independent Advisory Board of the Stability Council continues to see a need for action regarding Germany’s public finances in 2026.
• Even taking into account the currently applicable exemption for defense spending, the deficit ratio is expected to be around 3 1/2%, exceeding the 3% reference threshold. The Advisory Board therefore recommends implementing adjustment measures if necessary to avoid an excessive deficit procedure.
• According to the Federal Ministry of Finance (BMF) forecast, government net expenditure will increase by around 5 3/4% in 2026. This growth is significantly above the 4 1/2% ceiling agreed upon in the fiscal-structural plan. Nevertheless, the Advisory Board does not consider the European expenditure rules for 2026 to be breached. The reason is that Germany undershot the expenditure target in 2025, leaving a positive balance in the European control account at the end of the year.
• Based on the BMF forecast, the debt-to-GDP ratio is expected to rise from 63.5% in 2025 to around 66 1/2% in 2026. The Advisory Board considers this increase potentially overstated but strongly recommends limiting the rise in the debt ratio as much as possible and reducing it again over the medium term.
• In addition, the Advisory Board believes that the current national fiscal rules are not sufficiently effective.

See herepdf, 591 kb · de for the statement (in German).