Germany: Government Discusses New Austerity Measures

Germany's gross domestic product grew by just 0.2 percent in the first quarter of 2024

Christian Lindner

Federal and state tax revenues in Germany rose noticeable in April 2024. According to a new monthly report from the German Finance Ministry released on May 24, total tax revenues “increased by almost 8% compared to the same month of the previous year.”

Nevertheless, at the suggestion of German Finance Minister Christian Lindner, the government is preparing to discuss new austerity measures to meet requests for billions in funding that have been made by various ministers. According to information published by the German weekly Spiegel, Labor Minister Hubertus Heil has requested 7.6 billion euros more than the funds already allocated on a financial planning basis. Defense Minister Boris Pistorius, who is asking for another 6.5 billion euros, and Foreign Minister Annalena Baerbock, who wants to increase her ministry’s budget by another 2 billion euros, are “lagging behind” with their respective requests.

The increase in state spending doesn’t satisfy Lindner, who urged his colleagues in the executive branch to “find agreement in the 2025 budget negotiations.” Linder and Pistorius already met last week, but failed to reach an agreement, while the German economy continues to tread water.

Germany’s gross domestic product grew by just 0.2% in the first quarter of 2024 compared to the same period last year. The German Central Bank forecasts that economic output should also increase slightly in the second quarter. “After a drop in German GDP at the end of 2023, the German economy has started 2024 on a positive note,” said Ruth Brand, president of the Federal Statistical Office Destatis, according to whom growth in the first three months of this year “was primarily driven by an increase in exports.”