Germany Lowers Tax Revenue Forecast, Increasing Pressure on National Budget
Germany's Revised Tax Revenue Outlook and Fiscal Implications
BERLIN, May 7 (Reuters) - Germany's council of tax experts on Thursday cut its forecast for the country's tax revenues in the 2026‑2030 period by 87.5 billion euros ($103 billion) compared with its October estimate, adding to the fiscal pressure on a government already grappling with budget gaps, an energy shock from the war in Iran and rising defence costs.
Updated Federal Tax Income Projections
The panel now expects federal tax income in 2027 of about 395 billion euros, around 10.1 billion euros less than in its October projection.
Government Response to Economic Challenges
Finance Minister's Statement
Finance Minister Lars Klingbeil said the forecast showed how much economic damage the Iran war was causing.
Impact of Global Events on Economic Momentum
"Trump's irresponsible war and the resulting global energy price shock are temporarily slowing down the positive economic momentum," he said in a statement.
Budgetary Adjustments and Spending Plans
The downgrade comes a week after the government approved key targets for the 2027 budget, which already foresees 196.5 billion euros in new borrowing and a jump in defence spending to 3.1% of GDP, alongside record investment in transport, digitalisation and hospitals.
Economic Growth and Policy Challenges
With 2026 economic growth forecast at just 0.5% and unemployment above 3 million, lower tax revenue expectations are likely to complicate the coalition government's efforts to agree on tax, welfare and spending reforms.
($1 = 0.8496 euros)
(Reporting by Kirsti Knolle Editing by Miranda Murray)
