ifo Institute Slams 2025 Federal Budget: Debt Surge, Stalled Investments
The black-red federal government's 2025 budget, totalling 500 billion euros, has been analysed by the ifo Institute. The report reveals a dramatic increase in debt-financed public spending, from 10.5 to 16.3 percent. This shift is set to drive up public debt and social contributions, while leaving investment financing shaky and reform needs unaddressed.
The budget sees investments not growing but merely being shuffled between pots. Urgently needed projects in energy transition, infrastructure, and digitization are outsourced to a special fund. Core budget investments plummet from 53.4 to 37.5 billion euros. The debt-financed special fund is used to mask the growing national debt. Future-oriented expenses are struck from the regular budget and re-entered in the special fund, financed by new debts. The government plans to take on 81.8 billion euros in new loans in 2025, a 60 percent increase from previous plans. The ifo Institute criticises the reliance on accounting tricks and off-budget funds instead of future-oriented investments. Meanwhile, Ministries of Labor and Social Affairs, Defense, and Health benefit from debt-financed shifts, with well-filled coffers.
The ifo Institute's report paints a concerning picture of the 2025 federal budget. While investments are not increasing, public debt and social contributions are set to rise. The government's accounting methods and reliance on debt-financed shifts raise questions about their commitment to future-oriented investments and fiscal responsibility.
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