Overview

• The federal government projects a €172 billion coverage gap for 2027–2029, constraining policy options.
• IW finds per-capita federal social spending nearly doubled since 1992, rising from €1,464 to €2,665 in 2024.
• Nearly half of federal spending now goes to the social budget, including about one quarter for pension subsidies and roughly 11% for citizen’s income.
• Interest payments climbed from under 1% of the budget in 2021 to almost 8% now, with further increases expected.
• Municipalities are sliding into a record €24.8 billion deficit, and IW’s Tobias Hentze argues structural reforms are needed as tax cuts appear hardly feasible.