Published by Global Banking & Finance Review®
Posted on May 30, 2025
2 min readLast updated: January 23, 2026
Germany's labour office forecasts a €12 billion shortfall by 2029 due to rising unemployment, necessitating potential government loans.
BERLIN (Reuters) -Germany's labour office foresees a shortfall of 11.9 billion euros ($13.48 billion) by 2029 amid rising unemployment that may have to be plugged with government loans, the agency said in a letter to parliamentary budget committee on Friday.
For this year alone, the agency anticipates a deficit of 5.27 billion euros that will use up its reserves of 3.2 billion euros, it said in the letter seen by Reuters.
"It would also require additional liquidity assistance from the federal government in the form of loans totalling almost 2.35 billion euros," the letter said, adding that another 3.8 billion euros would be required for 2026.
The calculations are based on April forecasts from the government that foresee economic stagnation this year, down from a previously forecast 0.3% growth rate.
An annual average of just under 1 million people are expected to receive unemployment benefits, according to the letter.
Economic malaise has put pressure on the job market even against a backdrop of long-term labour shortages, adding to pressure on conservative Chancellor Friedrich Merz, who has vowed to pull the economy out of a two-year decline.
Tariffs announced by U.S. President Donald Trump could deal a major blow to those efforts - possibly putting the German economy on track for a third straight year of recession for the first time in the country's post-war history.
($1 = 0.8828 euros)
(Reporting by Holger Hansen, Writing by Friederike Heine, Editing by Rachel More)
Germany's labour office foresees a shortfall of 11.9 billion euros by 2029 amid rising unemployment.
The agency anticipates a deficit of 5.27 billion euros for this year, which will deplete its reserves.
An annual average of just under 1 million people are expected to receive unemployment benefits.
Economic stagnation and long-term labour shortages are contributing to the rising unemployment and financial shortfall.
The labour office indicated that additional liquidity assistance from the federal government in the form of loans may be necessary.
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