Germany: Slower Federal Spending in May

Research evidence excerpt

Germany: Slower Federal Spending in May

Economics Research

23 June 2026 | 12:14PM CEST

BOTTOM LINE: German federal expenditures in May came in at EUR 40.3bn, a bit Niklas Garnadt

+49(69)7532-1537 |

below our EUR 42.6bn forecast but EUR 1.0bn higher than in May 2025. Spending niklas.garnadt@gs.com

Goldman Sachs Bank Europe SE

was below our expectations in the main budget and in line with our expectations in

the military fund and the infrastructure & climate fund. With revenues notably ahead

of expectations due to NGEU transfers from the European Union, the fiscal balance

was less negative than we expected. That said, it remains notably wider than we

expected at the start of the year. The fiscal data since the start of the year support

our view of a notable fiscal expansion in 2026, which we expect to provide a fiscal

impulse of around 0.6pp.

KEY NUMBERS:

Expenditures in the Main Budget (May): EUR 36.3bn (vs. GS expected EUR 38.3bn

and 2025 Realized EUR 38.8bn)

Expenditures (implied) in the Military Fund (May): EUR 1.0bn (vs. GS expected EUR

1.0bn and 2025 Realized EUR 0.5bn)

Expenditures (implied) in the Infrastructure and Climate Fund (May): EUR 3.0bn (vs.

GS expected EUR 3.3bn and 2025 Realized EUR 0bn)

MAIN POINTS:

1. German fiscal data for May came in a bit below our expectations. Overall spending

across the main budget and the off-budget funds for the military and for

infrastructure & climate came in at EUR 40.3bn, below our expectations of EUR

42.6bn but EUR 1.0bn higher than spending in May 2025.

2. Spending stood at EUR 36.3bn in the main budget in May, about EUR 2.0bn below

our expectation and EUR 2.2bn below May last year. The downside surprise was due

to lower than expected defence spending while social spending and investment were