Eurozone member states are required to submit their stability programmes by the end of April each year. In doing so, they meet the current provisions of the European Stability and Growth Pact.

The Federal Cabinet adopted this year’s update of the German Stability Programme on Wednesday. It contains a forecast of the budget development for Germany as a whole as well as various other fiscal policy indicators. The programme sets out the most important fiscal policy measures and describes the implementation of the country-specific recommendations addressed to Germany by the European Union.

Budget no longer subject to emergency requirements

The German Stability Programme provides a comprehensive picture of the Federal Government’s financial policy. As of spring 2024, the overall situation can be described as a transition from the exceptional, crisis-stricken years of 2020 to 2023 back to a budget that is no longer subject to emergency requirements. Fiscal policy is geared towards the goals of strengthening the sustainability of public finance and organising government spending efficiently – while at the same time maintaining the high level of spending for investments in Germany’s future.

After four exceptional years beset by crises of varying nature and duration, the Federal Government is now looking to secure the sustainability of public finance and once again adhere to the regular credit ceiling of the debt brake. It is pursuing a comprehensive and targeted supply policy that aids the transformation while also aiming to increase growth potential.

Gradual reduction of debt level

The current projection is based on the 2024 federal budget and the applicable financial planning up until 2027, along with the annual projection for overall economic development. Germany’s overall “Maastricht” debt ratio will rise slightly from 63.6 percent of gross domestic product in 2023 to around 64 percent in 2024. From 2025 onwards it is forecast to gradually fall to 62 percent of gross domestic product by 2028.

The “Maastricht” debt ratio: The Maastricht Treaty of 1992 lays down criteria for countries wishing to join the monetary union, including an upper limit for the level of public debt.
In addition, the European Stability and Growth Pact stipulates requirements for compliance with this Maastricht upper limit: the debt of a member state may not exceed 60 percent of GDP.