Germany faces rating downgrade risk as debt climbs

Finance Minister Lars Klingbeil plans to raise more than one trillion euros in new borrowing between 2026 and 2030, including about €200 billion of fresh debt in 2027, to fund infrastructure, the armed forces and climate projects. Analysts warn that if the debt surge is not matched by economic growth, rating agencies could question Germany’s Triple‑A rating. A senior government official told the Handelsblatt that a continued rise in debt without a growth boost could trigger a downgrade.

The finance ministry’s internal projections show the debt‑to‑GDP ratio climbing from 63.5 % in 2025 to roughly 72 % by 2030 and 81 % by 2036. Rating agencies such as S&P Global, Moody’s and Fitch have signaled that a one‑percentage‑point increase in interest rates would raise annual borrowing costs by €2.1 billion, potentially reaching €17.3 billion in the medium term if the rating were lowered.