Business · Economy · 2 hrs ago
Ifo economists propose up to €72 billion in German budget savings
Ifo economists proposed major spending cuts to help Germany close gaps in its federal budget.
Their proposals concern Finance Minister Lars Klingbeil as coalition parties negotiate the 2027 budget.
The economists estimate the measures could save up to €72 billion in 2030 compared with current financial plans.
Their largest proposed saving is a 15% reduction in federal financial aid to states and municipalities, which they say could save €9 billion immediately and more than €35 billion by 2030.
They also suggest reducing maternity pension payments, linking pension increases to inflation rather than wages, and cutting development aid and parental benefits.
The proposals are recommendations, not adopted budget measures, and the economists say the deficit could exceed €40 billion in 2030 without action.
The budget committee is due to complete its review on Thursday, while Klingbeil and the coalition partner Union still need to address a funding gap in the 2027 budget.
Ifo economists say Germany could save up to €72 billion in its 2030 federal budget compared with current financial plans.
The proposals come as coalition parties negotiate the 2027 budget and face a multibillion-euro funding gap.
The economists identify reducing government financial aid as the largest potential source of savings.
Other proposals include reducing mother’s pension payments and linking pension increases to inflation rather than wages.
The study was commissioned by the New Social Market Economy Initiative.
- Who
- Economists at the Ifo Institute, led by Ifo president Clemens Fuest.
- What
- They proposed measures that they estimate could save up to €72 billion in the 2030 federal budget compared with current plans.
- When
- The study was reported on November 10, 2026. The savings estimate is for 2030.
- Where
- Germany’s federal budget.
- Why
- To limit the budget deficit and address funding gaps in the federal budget.
This story does not have two clearly opposing sides.
Federal financial aid was slightly more than €10 billion, according to the study.
The proposed budget includes an expansion of mother’s pension benefits, which the economists say would raise annual costs to about €18.5 billion.
The budget gap is projected to be around €30 billion without countermeasures.
The economists estimate the shortfall would exceed €40 billion without consolidation measures and say their proposals could save up to €72 billion compared with current plans.
- Potential 2030 savings
- Up to €72 billion compared with current financial plans
- Financial aid
- Nearly €60 billion currently, or 10% of federal spending
- Aid reduction proposal
- A 15% cut could save €9 billion immediately
- Mother’s pension proposal
- A 10% annual reduction in payments could save €9.3 billion compared with the status quo
- Projected 2028 budget gap
- Around €30 billion without countermeasures
- Study commissioner
- New Social Market Economy Initiative (INSM)
What people are saying
Since 2020, an exceptionally strong increase in financial aid has been observed.