The German federal government must pass two federal budgets this year. Despite the increased borrowing capacity provided by the new special fund and the budgetary exemption for the Bundeswehr, this presents various challenges—ranging from persistent budget shortfalls in the billions, rising interest rates, and criticism of the postponement of investments, to intense pressure for fiscal consolidation and reform.

In mid-July 2024, the Federal Cabinet approved a draft of the 2025 federal budget. After first having to close a funding gap of five billion euros, the federal government submitted the final draft to the Bundestag in mid-August 2024. Parliament and the Budget Committee are currently deliberating on the matter. Despite the adjustments, a funding shortfall of approximately twelve billion euros remains.

Germany is falling further and further behind when it comes to corporate investment and location decisions, even though tax revenues are growing and the tax-to-GDP ratio is at its highest level since reunification. The BDI is calling on policymakers to take countermeasures—by restructuring federal-state finances, consistently prioritizing spending, and providing appropriate tax incentives for investment.