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EGB FUNDING UPDATE: Debt Brake 2025 Net Issuance Allowance To Raise by E5.2bln

EGB FUNDING UPDATE
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Net issuance in Germany is likely to increase above the previous E51.3bln plan in 2025 according to multiple media sources which are citing a government paper.

  • However, lower economic activity also implies lower tax revenue, and hence the increase in net issuance is unlikely to allow any additional spending measures, but will mean that the German government is borrowing more to deliver the same spending.
  • The figures come on the back of the German government's recent downward revisions of their GDP estimates (2024 -0.2% now vs +0.3% prior, 2025 1.1% now vs 1.0% prior).
  • Specifically, they see a total net issuance allowance of E56.5bln in 2025, E5.2bln higher than planned in the preliminary 2025 budget.
  • 2025 budget parliamentary discussions are yet to be finished, the budget is scheduled to be passed by December and changes are possible until then. Even after the initial budget is finalised, a supplementary budget may be introduced, as was the case this year.
  • We've flagged upside risks to 2025 net issuance plans previously (2024-2025 Budget Details Appear Optimistic For Debt Issuance - MNI, July 17).
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Net issuance in Germany is likely to increase above the previous E51.3bln plan in 2025 according to multiple media sources which are citing a government paper.

  • However, lower economic activity also implies lower tax revenue, and hence the increase in net issuance is unlikely to allow any additional spending measures, but will mean that the German government is borrowing more to deliver the same spending.
  • The figures come on the back of the German government's recent downward revisions of their GDP estimates (2024 -0.2% now vs +0.3% prior, 2025 1.1% now vs 1.0% prior).
  • Specifically, they see a total net issuance allowance of E56.5bln in 2025, E5.2bln higher than planned in the preliminary 2025 budget.
  • 2025 budget parliamentary discussions are yet to be finished, the budget is scheduled to be passed by December and changes are possible until then. Even after the initial budget is finalised, a supplementary budget may be introduced, as was the case this year.
  • We've flagged upside risks to 2025 net issuance plans previously (2024-2025 Budget Details Appear Optimistic For Debt Issuance - MNI, July 17).