German municipal budget deficit remains at record $22.7B in 1st half

Germany’s municipalities recorded a €20.1 billion ($22.7 billion) budget deficit in the first half of 2026, matching the highest first-half shortfall since German reunification in 1990, official figures showed Thursday.

The deficit remained at the record level registered in the same period last year, according to preliminary data released by the Federal Statistical Office, Destatis.

The figures cover the core and extra budgets of municipalities and municipal associations, excluding Germany’s city states.

Core municipal budgets accounted for €20 billion of the shortfall, while extra budgets recorded a deficit of €100 million.

Expenditure rose 2.7% from a year earlier to €204.1 billion, while revenue increased 3% to €184 billion. Both grew more slowly than in the first half of 2025, when spending rose 6.9% and revenue increased 6%.

Personnel expenditure climbed 5.2% to €54.7 billion, while social benefit spending increased 3.9% to €46.3 billion. Interest costs rose more sharply, jumping 13.1% to €2.4 billion.

Meanwhile, capital investment fell 4.5% to €21.7 billion, with construction expenditure declining 2.4% to €15.5 billion.

Net municipal tax revenue increased just 0.9% to €57.3 billion. Net trade tax receipts fell 2% to €30.8 billion, with gains in other tax categories offsetting the decline.

Municipal revenue from administrative and user fees rose 5.7% to €26.5 billion.