Hamburg Court of Audit warns of billion-euro budget gap

The Hamburg Court of Audit has warned of a significant fiscal shift for the city-state, noting a clear break from previous years of financial stability. Vice President Philipp Häfner reported that the city faces a consolidation requirement of one billion euros for the 2027/28 double budget, which is 400 million euros higher than the estimates provided by the Senate.

This budgetary pressure is driven by rising costs in personnel, social benefits, and rents, alongside sharply increasing interest payments. While interest costs were approximately 130 million euros last year, they are projected to reach 560 million euros by 2028 and 700 million euros in 2029.

The era of high tax revenues and low interest rates, supplemented by significant dividends from Hapag-Lloyd, has ended. To manage the deficit, the city may need to reduce its general reserve from 3.3 billion euros to 600 million euros. The Court of Audit emphasized that without service reductions in the coming years, the budget will become unmanageable.