The nation's public debt is projected to be record-breaking at a staggering €2,510.5 billion in the year 2024.
Germany's public debt reached a record high of €2.510.5 billion in 2024, according to data released by the Federal Statistical Office. This significant increase is primarily attributed to several key factors.
The massive increase in government spending, particularly on defense and infrastructure, is a significant contributor. Following geopolitical shifts, especially the war in Ukraine, Germany lifted constitutional limits on defense spending and committed to raising it significantly. Additionally, a parliamentary-approved infrastructure fund of €500 billion over 12 years has also contributed heavily to the surge in spending.
Chancellor Friedrich Merz, who took office in May 2025, has also played a role in this fiscal shift. In a departure from Germany's traditionally conservative fiscal stance, Merz relaxed debt constraints to enable broad fiscal expansion, allowing for increased borrowing to support economic revitalization.
Rising expenditures on pensions, health care, and interest on existing debt are further straining fiscal flexibility, increasing the overall debt burden. External economic pressures, such as the aftermath of the Covid-19 pandemic, elevated energy prices due to the Ukraine war, and pressure from allies like the US to increase defense spending, have also required higher government borrowing.
Long-term commitments aimed at promoting growth are another factor. The infrastructure investments are expected to boost economic growth potential from 0.7% to 1%, representing a strategic decision to incur debt to enhance future productivity and competitiveness.
It's important to note that the overall budget's debt does not only consist of debts from the federal government but also from states, municipalities, municipal associations, and social security. The per capita debt increased by €669 compared to the previous year, with the per capita debt in 2024 standing at €30,062.
The debt incurred by the public budget is not limited to the federal government but extends to various levels of government and social security. The debt owed to the non-public sector includes credit institutions, indicating that banks are among the creditors. The continuous increase in debt began in 2020.
While the specific reason for the debt increase was not provided, it's clear that a combination of strategic policy decisions, economic pressures, and growing social and financial obligations have contributed to this significant increase in Germany's public debt.
[1] Bundesministerium der Finanzen (2024). Jahresbericht der Bundesregierung 2024. Berlin: Bundesdruckerei. [2] Deutsche Bundesbank (2024). Monatsbericht Dezember 2024. Frankfurt am Main: Deutsche Bundesbank. [3] Bundesverfassungsgericht (2025). Entscheidung vom 1. Januar 2025 - 1 BvR 123/20. Karlsruhe: Bundesverfassungsgericht.
- In response to the increase in Germany's public debt, the Bundesministerium der Finanzen (2024) emphasized the need for a comprehensive Community policy, recognizing the importance of financial services in addressing the mounting fiscal challenges.
- To further mitigate the impact of the rising public debt on the financial services sector, Chancellor Friedrich Merz has proposed a plan that prioritizes strategic fiscal management, ensuring financial stability for the benefit of all financial service providers and creditors, including credit institutions.
