Germany is slowly losing its resilience to crises, the Federal Court of Auditors says.

The Federal Court of Auditors has sounded the alarm over Germany’s public debt.

„The severe global crises of the past three years have left deep scars on federal finances,”

the authority’s chairman, Kay Scheller, warned in connection with next year’s budget planning. The mountain of debts has risen steeply in the recent period. Since reunification, the federal republic has accumulated around 1,300 billion euros in debt, which has rocketed to 2,100 billion euros in the last three years. This is due to the crisis loans of the the past few years, the Federal Court of Auditors points out.

Germany has taken on huge debts, for example, to handle the Covid pandemic and the energy crisis. Those will have to be repaid from 2028 and are not expected to be repaid until 2061. The key element of the problem is that interest costs are also rising steeply, from 4 to 40 billion euros since 2021. Interest repayments are another financial burden for the younger generation. For example, a thirteen-year-old child today who enters the labour market in 2028 at the age of 18 will be paying the repayments and interest on the crisis loans with his taxes until he is 50.

„This dynamic and its consequences threaten to seriously jeopardise the sustainability of federal finances and thus also the state’s ability to act. Constantly dodging new debts ignores reality and ignores the interests of the younger generation in particular.”

the Federal Audit Office warned, stating that large parts of the federal budget are already tied up, and its resilience to crises is decreasing. The experts say that the government has to act immediately, or Germany’s economy may collapse under the debts. They suggest, for example, that Olaf Scholz’s government should refrain from new borrowing, introduce reporting on rising interest expenses. If possible, the government should also repay a part of crisis debts as soon as possible to decrease long-term expenses.

In addition, the federal budget no longer reflects the true state of federal finances, the experts say. This is because a significant portion of the crisis loans is in special funds, which also circumvents the debt rule set out in the Fundamental Law.

“It is up to politicians to plan the budget well, that is, to prioritise. The government and the parliament have the responsibility to consider the issues, resolve the conflicts and make decisions, instead of choosing the easy way out and pushing those debt-related decisions into the future,”

the Audit Office warns the cabinet. In Germany, the preparation of the 2024 federal budget and the financial plan for 2025 to 2027 will start in March 2023.