22.10.2026 – "The latest tax revenue forecast once again shows rising government income. While this is initially good news, it is by no means a reason to sound the all-clear. Anyone concluding from this that fiscal challenges have been resolved misunderstands the structural situation of the government and economy.

The expected additional revenue is based on an increase in the nominal gross domestic product of 2.8 percent this year and 3.8 percent next year. This sounds promising, but only at first glance. More than half of this growth is driven by government stimulus, predominantly debt-financed. Growth driven by private investments remains weak because structural problems remain unaddressed.

Sustainable growth is not achieved by ever higher public spending but through company investments, innovations, and increasing productivity.

This is precisely where the challenges for Germany as a business location lie. While the public sector is significantly expanding its debt-financed investments, private investments are growing only hesitantly. Germany has built up a substantial investment backlog internationally. Weakness in equipment investments and the minimal contribution of capital stock to future growth clearly indicate that the private economy cannot yet sustain the dynamics on its own.

Improving the conditions for investments is now all the more urgent. Companies have been pointing to the same barriers for years: high energy and location costs, excessive regulation, bureaucratic burdens, lengthy approval processes, and ongoing geopolitical uncertainties weighing on exports. Anyone who wants to encourage more private investments must address these issues.

With the expected additional revenues, the electricity tax could finally be reduced to the European level for everyone. This would be an effective signal for greater competitiveness.

In general, besides ensuring a stable revenue base, structural expenditure limitations and consistent prioritization of government tasks are needed. The result of the tax revenue forecast is therefore not a signal for new distribution leeway but a mandate to strengthen the competitiveness of Germany as a business location. Only if Germany once again generates more self-sustaining growth through private investments can prosperity, employment, and solid public finances be secured in the long term."

Tax revenue since 2008

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