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

Germany's 2025 Budget Overview

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.

Key Financial Figures

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.

Impact of Fiscal Reforms

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

Future Economic Implications

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 kickstart 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.

The figure for total borrowing is below the 143.2 billion euros originally planned.

($1 = 0.8517 euros)

(Reporting by Maria Martinez and Holger Hansen, editing by Thomas Seythal)