Germany cuts tax revenue forecast, faces €52 bn fiscal gap

Germany’s Federal Ministry of Finance and the tax‑revenue advisory council have sharply lowered their outlook for federal tax receipts for 2026‑2030. The latest forecast reduces expected revenues by €87.5 bn compared with the October estimate, with 2027 revenues now projected at about €395 bn – roughly €10.1 bn less than previously forecast. Bloomberg data shows 2026 revenues at €382.1 bn, about €9.9 bn below earlier expectations, creating a cumulative shortfall of roughly €52.3 bn over the next four years.

Finance Minister Lars Klingbeil linked the downgrade to “the irresponsible war of Trump and the subsequent global energy price shock” and said the current forecasts “show how severely we are financially affected by the war in Iran.” The downturn adds pressure to Chancellor Olaf Scholz’s coalition, which already faces low growth (0.5% projected for 2026), rising defence spending (3.1% of GDP), and a planned €196.5 bn of new borrowing in the 2027 budget. The widening fiscal gap is expected to trigger spending cuts and reforms in taxes, welfare and public finance.

The German government had earlier set budget targets for 2027, but the revised revenue outlook threatens to complicate efforts to close an existing deficit of about €30 bn for 2028 and to meet fiscal consolidation goals.