Finance | Berlin a few years ago

If they ever existed, the fat years are over. The paint is off. Any government in Berlin will have to deal with this reality. Photo: imago/Jürgen Ritter It is currently unclear what the new Berlin state government will look like. The election winners, the Left, the Greens and the SPD met on Thursday for initial discussions. However, it is already certain that the future Senate will face greater financial challenges. The financial administration estimates the annual deficit from 2028 at five billion euros, assuming expenditure and income develop consistently. This emerges from a template for financial planning for the years 2026 to 2030, which is available “nd”.

»The start of the new legislative period will not only be an opportunity to take concrete consolidation steps; Rather, budget consolidation will set the framework for action and determine the agenda," writes Finance Senator Stefan Evers (CDU) in the foreword to the financial planning. His administration paints a desolate picture of Berlin's financial situation: in the current budget, 5.6 billion euros more are being spent than are being received. The permitted credit limit has been exhausted to the maximum and financial reserves have been completely used up. The country's debt amounts to almost 69 billion euros, although special assets and loans that run outside the regular budget are not yet included. This corresponds to around 30 percent of the capital's gross domestic product.

This could have dramatic consequences for the state of Berlin. “It can be assumed that the Stability Council will open an evaluation process at its meeting in December 2026,” the document says. The joint federal and state committee examines the state budgets. In the event of a budget emergency, the Stability Council could impose a restructuring program on Berlin. According to the Senate Finance Administration, Berlin is already exceeding three of the Stability Council's four relevant indicators: financing balance, debt per resident and loan financing ratio.

There are probably tactical reasons why the paper is only now being released to the press. Formulations in the text make it clear that it was already in place before the House of Representatives election - the submission speaks of "negotiations" on the capital city financing agreement, which, however, was decided in the week before the election. The paper assesses the budget policy of the past three years as barely adequate. While Evers' CDU campaigned on expanding housing construction during the election campaign, the financial planning envisages reducing loans for new construction by one billion euros.

The Left Party – currently with a good chance of participating in government – ​​sees a little more leeway. You can defer the repayment of Corona loans, said Steffen Zillich, outgoing left-wing member of the House of Representatives, at a press conference on Wednesday. The Left Party also wants to exploit economic loans further than the financial planning envisages. The annual deficit could be reduced to two billion euros, said Zillich.

However, this would also further increase the interest burden. “In the short term, you can’t achieve a balanced budget,” said Zillich. This is not what we are aiming for in the new legislature, but rather we want to lay down a medium-term consolidation path. Part of this is also higher taxes and fees, for example for residents' parking or for luxury villas. A mid-three-digit million amount could be mobilized “within a year,” said Zillich.

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