Overview

• German municipalities face increasing financial strain, with 84% of treasuries expecting unfavorable budgets for 2025.
• A record €24.8 billion municipal deficit in 2024 underscores the ongoing fiscal challenges since reunification.
• The share of municipalities forecasting very adverse financial developments over the next five years has risen to 44%.
• The federal infrastructure fund offers partial relief for investment backlogs but fails to address structural funding mismatches.
• Escalating social expenditures and stagnant tax revenues exacerbate the financial instability of local governments.