Berlin, October 1st, 2026 (The Berlin Spectator) – Germany’s capital could run a deficit of about five billion Euro every year starting in 2028 unless it changes course soon, according to a draft for the “Financial Planning 2026 to 2030” prepared by the city state of Berlin’s Senate Finance Administration, as the “Tagesspiegel” daily reports.
In the document, the outgoing Finance Senator Stefan Evers of the CDU calls for an “unavoidable reduction” of state spending. If that does not happen, he warns, Berlin would slide into a budget emergency and become a case for financial restructuring.
According to the newspaper report, spending has been outpacing revenue for years. Tax income has not grown as hoped because of a weaker economy, while social costs keep climbing. Personnel expenses have also risen sharply, and a ruling by the Federal Constitutional Court on civil servant pay is expected to push them higher. The Finance Administration projects that Berlin will spend roughly 5.6 billion Euro more than it takes in this year, with a gap of 5.2 billion Euro in 2027.
Real Savings
Berlin is borrowing the maximum legally allowed, about 3.9 billion Euro in each of the two years. The coalition also spent nearly all of the state’s reserves, a little over three billion Euro, to finance the 2026/27 double budget. In addition, many planned investments were moved out of the core budget and into the federal infrastructure special fund. According to the newspaper report, those options will be largely gone in the coming years, which means real savings are unavoidable.
Borrowing has already pushed up the state’s total debt, from 57.6 billion Euro in 2019 to 71.4 billion at the end of 2025. Continuing on this path is difficult because of the debt brake and because of the Stability Council, a body of federal and state representatives that monitors public finances. One of its benchmarks is the share of spending financed by credit, and Berlin would have to cut its borrowing significantly to meet it. Officials in the Finance Administration expect the council to open proceedings against Berlin as early as December 2026, the “Tagesspiegel” writes.
Such a step would require Berlin to agree on a restructuring program with the council, typically lasting five years and aimed at reducing new borrowing. If Berlin missed its targets, the council could demand further cuts. The city has been here before. In 2011, the Stability Council determined that Berlin faced a budget emergency, and the state had to complete a restructuring program that ran until 2016. Bremen is currently in such a process, and Saarland and Schleswig-Holstein went through one in the past decade.
“Quite a Burden”
The Left Party (“Die Linke”), which won the state election, acknowledges the problem. Steffen Zillich, the budget spokesman of the outgoing Left parliamentary group, described the deficit as “quite a burden”. He was quoted in the report mentioned. According to the daily, he argued the Finance Administration was overstating some risks.
In his view, the claim that massive cuts are needed to produce a constitutional budget is not supported by the numbers. The Left expects higher revenue than the Senate’s forecasts assume, which would make the actual shortfall several billion Euro smaller each year and allow the gap to be bridged with new loans for the time being.
Rather than cutting quickly and drastically, the Left favors a longer path toward consolidation. Zillich said that balancing the budget will not be possible during the coming legislative term.
Whether “Die Linke” will actually form a coalition with the Greens and the SPD, is an open question. This has to do with the SPD’s refusal to accept dispossessions of real estate companies, but also the many antisemitism scandals “Die Linke” has been rocked by.
