Recommendation for a COUNCIL RECOMMENDATION endorsing the national medium-term fiscal-structural plan of Germany and allowing Germany to deviate from the maximum growth rates of net expenditure as set by the Council under Regulation (EU) 2024/1263 (Activation of the national escape clause)
Date: 2025-09-16
Institutions: Directorate-General for Economic and Financial Affairs, European Commission
Subjects: Germany, budget deficit, coordination of EMU policies, defence expenditure, economic reform, fiscal policy, investment, macroeconomics, national planning, public debt, public expenditure, structural adjustment

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  EN 

   EUROPEAN COMMISSION  Brussels, 16.9.2025  COM(2025) 514 final  Recommendation for a COUNCIL RECOMMENDATION endorsing the national medium-term fiscal-structural plan of Germany  and  allowing Germany to deviate from the maximum growth rates of net expenditure as set by the Council under Regulation (EU) 2024/1263 (Activation of the national escape clause)  
 
Recommendation for a 

COUNCIL RECOMMENDATION 

endorsing the national medium-term fiscal-structural plan of Germany  
and  
allowing Germany to deviate from the maximum growth rates of net expenditure as set 
by the Council under Regulation (EU) 2024/1263 
(Activation of the national escape clause) 

THE COUNCIL OF THE EUROPEAN UNION, 

Having  regard  to  the  Treaty  on  the  Functioning  of  the  European  Union,  and  in  particular 
Article 121 thereof, 

Having regard to Regulation (EU) 2024/1263, and in particular Articles 17 and 26 thereof, 

Having regard to the recommendation from the Commission, 

Whereas: 

GENERAL CONSIDERATIONS 

(1) 

(2) 

1 

2 

3 

A  reformed  EU  economic  governance  framework  entered  into  force  on  30  April 
2024. Regulation (EU) 2024/1263 of the European Parliament and of the Council on 
the  effective  coordination  of  economic  policies  and  on  multilateral  budgetary 
surveillance1,  together  with  the  amended  Regulation  (EC)  No  1467/97  on  the 
implementation  of  the  excessive  deficit  procedure2,  and  the  amended  Council 
Directive 2011/85/EU on the budgetary frameworks of Member States3 are the core 
elements of the reformed EU economic governance framework. The framework aims 
at  ensuring  public  debt  sustainability  and  sustainable  and  inclusive  growth  through 
reforms  and  investments.  It  promotes  national  ownership  and  has  a  medium-term 
focus, combined with an effective and coherent enforcement of the rules. 

The  national  medium-term  fiscal-structural  plans  that  Member  States  submit  to  the 
Council  and  to  the  Commission  are  at  the  centre  of  the  new  economic  governance 
framework. The plans are to deliver on two objectives: i) ensuring that, by the end of 
the  adjustment  period,  general  government  debt  is  on  a  plausibly  downward 
trajectory, or stays at prudent levels, and that the government deficit is brought and 
maintained below the reference value of 3% of GDP over the medium term, and ii) 

Regulation 

(EC)  No 

Regulation  (EU)  2024/1263  of  the  European  Parliament  and  of  the  Council  of  29  April  2024  on  the 
effective  coordination  of  economic  policies  and  on  multilateral  budgetary  surveillance  and  repealing 
Council 
ELI: 
http://data.europa.eu/eli/reg/2024/1263/oj). 
Council Regulation (EC) No 1467/97 of 7 July 1997 on speeding up and clarifying the implementation 
of 
ELI: 
procedure 
http://data.europa.eu/eli/reg/1997/1467/2024-04-30). 
Council Directive 2011/85/EU of 8 November 2011 on requirements for budgetary frameworks of the 
Member States (OJ L, 306, 23.11.2011, ELI: http://data.europa.eu/eli/dir/2011/85/2024-04-30). 

2024/1263, 

30.4.2024, 

excessive 

2.8.1997, 

1466/97 

deficit 

209, 

(OJ 

(OJ 

the 

L, 

L, 

EN 

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ensuring the delivery of reforms and investments responding to the main challenges 
identified  in  the  context  of  the  European  Semester  and  addressing  the  common 
priorities of the EU. To that end, each plan is to present a medium-term commitment 
to  maximum  growth  rates  of  net  expenditure4,  which  effectively  establishes  a 
budgetary  constraint  for  the  duration  of  the  plan,  covering  four  or  five  years 
(depending  on  the  regular  term  of  legislature  in  a  Member  State).  In  addition,  the 
plan  is  to  explain  how  the  Member  State  will  ensure  the  delivery  of  reforms  and 
investments  responding  to  the  main  challenges  identified  in  the  context  of  the 
European Semester, in particular in the country-specific recommendations (including 
those  pertaining  to  the  macroeconomic  imbalances  procedure  (MIP),  if  applicable), 
and  how  the  Member  State  will  address  the  common  priorities  of  the  Union.  The 
period for fiscal adjustment covers a period of four years, which may be extended by 
up to three years if the Member State commits to delivering a set of relevant reforms 
and investments that satisfies the criteria set out in Regulation (EU) 2024/1263. 

Following  the  submission  of  the  plan,  the  Commission  is  to  assess  whether  it 
complies with the requirements of Regulation (EU) 2024/1263. 

Upon  a  recommendation  from  the  Commission,  the  Council  is  to  then  adopt  a 
recommendation to set the maximum growth rates of net expenditure of the Member 
State  concerned  and,  where  applicable,  endorse  the  set  of  reform  and  investment 
commitments underpinning an extension of the fiscal adjustment period. 

The framework provides for flexibility in the application of the rules in the event of 
exceptional  circumstances  outside  the  control  of  Member  States  that  have  a  major 
impact  on  the  public  finances,  in  accordance  with  Article  26  of  Regulation  (EU) 
2024/1263.  In  the  latter  case,  following  a  request  from  a  Member  State  and  on  a 
recommendation  by  the  Commission  based  on  its  analysis,  the  Council  may  within 
four weeks of the Commission recommendation adopt a recommendation allowing a 
Member State to deviate from its maximum growth rates of net expenditure as set by 
the Council, where (i) exceptional circumstances outside the control of the Member 
State, (ii) have a major impact on the public finances of the Member State concerned, 
and (iii) provided that such deviation does not endanger fiscal sustainability over the 
medium term. The Council is to specify a time limit for such deviation.  

(3) 

(4) 

(5) 

CONSIDERATIONS  CONCERNING  THE  NATIONAL  MEDIUM-TERM  FISCAL-
STRUCTURAL PLAN OF GERMANY 

(6) 

4 

On 17 July 2025, Germany submitted its national medium-term fiscal-structural plan 
to  the  Council  and  to  the  Commission.  The  submission  took  place  following  an 
extension  of  the  deadline  set  out  in  Article  36  of  Regulation  (EU)  2024/1263,  as 
agreed  with  the  Commission  in  view  of  the  reasons  provided  by  Germany.  The 
extension  was  agreed  as  the  previous  national  government  lost  parliamentary 
majority and  parliamentary elections were called for 23 February 2025, which was 
followed by several weeks of coalition negotiations, leading to a coalition agreement 
on 9 April and the formation of a new government on 6 May 2025. 

Net expenditure as defined in Article 2 of Regulation (EU) 2024/1263, namely government expenditure 
net  of  (i)  interest  expenditure,  (ii)  discretionary  revenue  measures,  (iii)  expenditure  on  Union 
programmes fully matched by revenue from Union funds, (iv)  national expenditure on co-financing of 
programmes funded by the Union, (v) cyclical elements of unemployment benefit expenditure and (vi) 
one-offs and other temporary measures.  

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Process prior to the submission of the plan    

(7) 

On  17  June  2025  the  Commission  sent,  according  to  Article  9  of  Regulation  (EU) 
2024/1263,  its  prior  guidance  containing  the  reference  trajectory5  to  Germany.  The 
Commission published the reference trajectory on 24 July6. The reference trajectory 
is risk-based and ensures that, by the end of the fiscal adjustment period and in the 
absence  of  further  budgetary  measures  beyond  the  adjustment  period,  general 
government  debt  is  on  a  plausibly  downward  trajectory  or  stays  at  prudent  levels 
over the medium  term, and the general government  deficit is  brought  below 3% of 
GDP over the adjustment period and maintained below that reference value over the 
medium term. The medium term is defined as the ten-year period after the end of the 
adjustment  period.  In  accordance  with  Articles  7  and  8  of  Regulation  (EU) 
2024/1263,  the  reference  trajectory  is  also  consistent  with  the  debt  sustainability 
safeguard and the deficit resilience safeguard. 

Based  on the Commission’s assumptions and assuming a 7-year adjustment period, 
the reference trajectory provided to Germany sets out that net expenditure should not 
grow  by  more  than  the  values  provided  in  Table  1.  This  corresponds  to  annual 
average  net  expenditure  growth  of  1.8%  over  the  7-year  adjustment  period  (2025-
2031)  and  of  1.7%  over  the  5-year  period  covered  by  the  plan  (2025-2029).  The 
horizon of the plan is five years (2025-2029) instead of the usual four years because 
in view of the  federal  elections having taken place exceptionally in February 2025, 
the current federal government will be responsible for the preparation of five budget 
laws instead of four.  

Table 1: Reference trajectory provided by the Commission to Germany on 17 June 2025  

2025 

2026 

2027 

2028 

2029 

2030 

2031 

Average 
2025-
2029 

Average 
2025-
2031 

1.8 

1.6 

1.7 

1.8 

1.9 

1.9 

1.9 

1.7 

1.8 

Maximum net 
expenditure 
growth 

(annual, %) 

5 

6 

Prior guidance transmitted to the Member States and  the Economic and Financial Committee includes 
trajectories  without  and  with  an  extension  of  the  adjustment  period  (covering  4  and  7  years, 
respectively).  It  also  includes  the  main  initial  conditions  and  underlying  assumptions  used  in  the 
Commission’s  medium-term  government  debt  projection  framework.  The  reference  trajectory  was 
calculated on the basis of the methodology described in the Commission’s Debt Sustainability Monitor 
2023  (https://economy-finance.ec.europa.eu/publications/debt-sustainability-monitor-2023_en).  It 
is 
based on the European Commission Spring 2025 Forecast and its medium-term extension up to 2034, 
and  long-term  GDP  growth  and  ageing  costs  are  in  line  with  the  joint  Commission-Council  2024 
Ageing  Report  (https://economy-finance.ec.europa.eu/publications/2024-ageing-report-economic-and-
budgetary-projections-eu-member-states-2022-2070_en). 
https://economy-finance.ec.europa.eu/economic-and-fiscal-governance/national-medium-term-fiscal-
structural-plans_en#Germany 

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Source: Commission’s calculations. 

(8) 

(9) 

(10) 

In line with Article 12 of Regulation (EU) 2024/1263, Germany and the Commission 
engaged in a technical dialogue in June and July 2025. The dialogue centred on the 
maximum growth rates of net expenditure envisaged by Germany and its underlying 
assumptions as well as the envisaged set of reform and investment commitments to 
underpin  an  extension  of  the  adjustment  period,  including  investment-enabling 
reforms  and  measures  targeting  simplification,  efficiency  and  the  improvement  of 
labour  supply.  In  the  dialogue,  Germany  and  the  Commission  also  discussed  the 
envisaged  delivery  of  reforms  and  investments  responding  to  the  main  challenges 
identified in the context of the European Semester and the common priorities of the 
Union,  namely  a  fair  green  and  digital  transition,  social  and  economic  resilience, 
energy security and the build-up of defence capabilities. 

In  July  2025,  in  line  with  Article  11(3)  and  36(1),  point  (c),  of  Regulation  (EU) 
2024/1263, according to the information provided by Germany in its plan, Germany 
engaged in a consultation process with social partners and regional authorities.  

The  Stability  Council,  a  joint  body  of  the  German  Federation  and  the  Länder, 
delivered  an  opinion7  on  the  macroeconomic  forecast  and  the  macroeconomic 
assumptions  underpinning 
the  multi-annual  maximum  growth  rates  of  net 
expenditure.  Overall,  the  expenditure  path  in  the  medium-term  plan  was  seen  as 
compliant  with  the  EU  rules  and  supportive  of  economic  growth.  The  Stability 
Council  noted  that  a  reliable  assessment  can  only  be  made  after  the  nationwide 
projection  is  reviewed  in  October  2025  and  underlined  the  importance  of  the 
implementation  of  growth-enhancing  measures,  spending  discipline,  and  structural 
reforms to meet the targets.  

(11) 

The  plan  was  presented  to  Parliament  on  20  and  21  July  via  the  relevant 
parliamentary committees. 

Other related processes  

(12) 

On 15 October 2024, Germany submitted its Draft Budgetary Plan for the year 2025. 
The Commission adopted an opinion on this Draft Budgetary Plan on 26 November 
20248. Given political developments in Germany, the draft budget 2025, on the basis 
of  which  the  Commission  adopted  the  opinion,  was  not  voted  or  approved  by  the 
national  parliament  and  did  not  enter  into  force.  Following  the  federal  elections,  a 
revised draft budget for 2025 was prepared by the federal government and is set to be 
adopted  by  the  national  parliament  late  September  2025.  Furthermore,  the  federal 
government adopted the draft budget law 2026 on 30 July, after the submission of the 
plan. It is expected to be adopted by the national parliament in early December 2025. 
Germany  is  expected  to  submit  its  Draft  Budgetary  Plan  for  2026  by  15  October 
2025. 

(13) 

On 24 April 2025, Germany requested the activation of the national escape clause to 
accommodate  higher  defence  spending,  in  accordance  with  Article  26  (1)  of 
Regulation  (EU)  2024/1263  and  following  the  Commission  Communication 
(C(2025)2000 final) of 19 March 2025. This request was hence submitted prior to the 

7 

8 

EN 

in 

the 

Included 
finance.ec.europa.eu/document/download/07601136-78f2-41dc-a188-
4a5127acdb9c_en?filename=2025-08-19_MTFSP_Final_EN_BF_a.pdf. 
Commission Opinion on the Draft Budgetary Plan of Germany, 26.11.2024, C(2024)9058 final. 

German 

plan, 

106 

ff., 

p. 

https://economy-

4 

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(14) 

submission of the medium-term fiscal-structural plan. The request for the activation 
of the national escape clause has been assessed by the Commission at the same time 
as  the  assessment  of  the  medium-term  fiscal-structural  plan.  Therefore,  the 
assessment of the plan takes into account the activation of the national escape clause, 
notably in  relation  to  the impact  of the debt  sustainability safeguard and the deficit 
resilience safeguard. 

The  debt  sustainability  safeguard  and  the  deficit  resilience  safeguard  were 
established (Articles 7 and 8 of Regulation (EU) 2024/1263) to ensure that Member 
States  implement  a  minimum  fiscal  adjustment  and  may  be  stricter  than  what  is 
required  by  the  sustainability-based  approach.  These  safeguards  are  not  taken  into 
account  during  the  period  of  the  activation  of  the  national  escape  clause.  This 
approach  ensures  that  the  sustainability  condition  of  the  national  escape  clause  is 
applied equally to all Member States.    

(15) 

On  8  July  2025,  the  Council  addressed  to  Germany  a  series  of  country-specific 
recommendations (CSRs) in the context of the European Semester9. 

SUMMARY OF THE PLAN AND THE COMMISSION’S ASSESSMENT THEREOF 

(16) 

In line with Article 16 of Regulation (EU) 2024/1263, the Commission assessed the 
plan as follows: 

Context: macroeconomic and fiscal situation and outlook 

(17) 

Economic  activity  in  Germany  declined  by  0.5%  in  2024,  driven  by  a  decline  in 
exports  and  investment.10  According  to  the  Commission  Spring  2025  Forecast, 
published in May 2025, the economy is expected to stagnate in 2025, as the recovery 
in private consumption and investment is largely offset by the negative impact of net 
exports. In 2026, real GDP is expected to increase by 1.1%, supported by recovering 
exports  and  continued  growth  in  private  consumption  and  investment.  Over  the 
forecast horizon (i.e. 2025-2026), potential GDP growth in  Germany is expected to 
decrease  slightly  from  0.5%  in  2024  to  0.3%  in  2025  and  2026,  driven  mainly  by 
population decline, continued reduction of hours worked per employee, and low total 
factor  productivity  growth.  The  unemployment  rate  stood  at  3.4%  in  2024  and  is 
projected by the Commission to amount to 3.6% in 2025 and 3.3% in 2026. Inflation 
(GDP deflator) is projected to decrease from 3.1% in 2024 to 2.4% in 2025 and 2.2% 
in 2026. The policy intentions of the government to boost infrastructure and defence 
spending were not yet sufficiently detailed to be included in the Commission Spring 
2025  Forecast  by  its  cut-off  date.  The  data  releases  and  policy  developments  since 
the  publication  of  the  Spring  Forecast  suggest  that  economic  growth  in  2025  and 
2026 as well as the GDP deflator for 2025 may be higher than expected in spring. 

(18) 

Regarding fiscal developments, Germany’s general government deficit amounted to 
2.8% of GDP in 2024.11 According to the Commission Spring 2025 Forecast, it is set 

9 

10 

11 

Council  Recommendation  on  the  economic,  social,  employment,  structural  and  budgetary  policies  of 
Germany, 08.07.2025.  
The  German  Federal  Statistical  Office  (DESTATIS)  revised  data  for  relevant  macroeconomic 
indicators,  such  as  GDP  figures  from  2008  to  2024.  The  results  of  the  revision  are  available  via 
https://www.destatis.de/DE/Presse/Pressemitteilungen/2025/07/PD25_278_811.html. 
Source: Eurostat. 

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to remain broadly stable at 2.7% of GDP in 2025 and, on a no-policy-change basis, 
to increase to 2.9% in 2026. General government debt stood at 62.5% of GDP at end-
2024. According to the Commission Spring 2025 Forecast, it is projected to increase 
to 63.8% of GDP at end-2025 and 64.7% at end-2026. These forecasts do not factor 
in more recent policy announcements mentioned in the medium-term plan, as it was 
submitted after the cut-off date of the Spring Forecast. On 24 June and 30 July 2025, 
the German federal government adopted the federal budgets for 2025 and 2026. The 
budgets indicate an increase in expenditure and deficit in 2025 and 2026 compared to 
the Commission Spring 2025 Forecasts.  

Maximum growth rates of net expenditure and main macroeconomic assumptions in the 
plan 

(19) 

(20) 

(21) 

Germany’s national medium-term fiscal-structural plan covers the period 2025-2029 
and presents a fiscal adjustment over seven years (2025-2031). 

The  plan  contains  the  information  required  by  Article  13  of  Regulation  (EU) 
2024/126312. 

The plan commits to the maximum growth rates of net expenditure indicated in Table 
2, taking into account the activation of the national escape clause, that is without the 
requirements stemming from the safeguards (see Table 2 lower part), corresponding 
to average maximum net expenditure growth of 2.9% over the years 2025-2029. The 
Commission  assessment  has  been  based  on  the  maximum  growth  rates  of  net 
expenditure  without  the  requirements  stemming  from  the  safeguards.  In  addition, 
Germany commits to a set of reforms and investments with a view to extending the 
adjustment  period  to  7  years  (2025-2031),  over  which  the  average  maximum  net 
expenditure growth is planned to be 2.8%.   

Table 2: Maximum net expenditure growth in Germany’s plan 
with and without the debt sustainability safeguard and the deficit resilience safeguard 
(annual and cumulative growth rates in %, in nominal terms) 

Extension of the 
adjustment period 

2024 

2025 

2026 

2027 

2028 

2029 

2030 

2031  Average 
over the 
period of 
validity 
of the 
plan 

Average 
over the 
adjustme
nt period 

2025 – 
2031 

2025-
2029 

12 

The  plan  does  not  include  detailed  information  on  the  Commission’s  reference  trajectory  required  by 
Article  13  (b)  and  information  on  implicit  and  contingent  liabilities  required  by  Article  13  (g)  of 
Regulation (EU) 2024/1263. 

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Including the impact of the debt sustainability safeguard and the deficit resilience safeguard 

Annual 

4.0 

3.1 

3.0 

2.7 

2.1 

2.0 

2.4 

2.4 

2.6 

Cumulative 
(*)  

3.1 

6.2 

9.0 

11.3 

13.5 

16.3 

19.1 

n.a. 

2.5 

n.a. 

Net of the impact of the debt sustainability safeguard and the deficit resilience safeguard (**)  

Annual 

4.0 

Cumulative 
(*)  

4.4 

4.4 

4.5 

2.3 

1.7 

1.6 

2.7 

2.7 

9.0 

11.5 

13.3 

15.2 

18.3 

21.5 

2.9 

n.a. 

2.8 

n.a. 

(*) The cumulative growth rates are calculated by reference to the base year of 2024.   
(**) The period of activation of the national escape clause is 2025-2028. 

Source: Medium-term fiscal-structural plan of Germany and Commission calculations.  

Implications of the plan’s net expenditure commitments for general government debt 

(22) 

If the maximum growth rates of net expenditure committed to in the plan (see Table 
2, lower part) and the underlying assumptions materialise, general government debt 
would, according to the plan, gradually increase from 62.5% of GDP at end-2024 to 
64.4% of GDP at the end of the adjustment period (2031), as shown in Table 3. After 
the adjustment period, i.e. in the medium term, general government debt is projected 
to decrease, reaching 56.5% of GDP in 2041. 

Table 3: General government debt and balance developments in Germany’s plan 

2024 

2025 

2026 

2027 

2028 

2029 

2030 

2031 

2041 

62.5 

63.9 

65.5 

66.5 

66.9 

66.5 

65.5 

64.4 

56.5 

-2.7 

-3.3 

-3.8 

-3.2 

-2.5 

-1.8 

-1.4 

-1.1 

-1.1 

Government 
debt 

(% of GDP) 

Government 
balance 

(% of GDP) 

Source: Medium-term fiscal-structural plan of Germany 

According  to  the  plan,  general  government  debt-to-GDP  ratio  would  be  put  on  a 
downward path by the end of the adjustment period (2031). This is plausible as, based 
on the plan’s assumptions, debt is projected to decline over the ten years following the 
adjustment  period  under  all  deterministic  stress  tests  of  the  Commission’s  Debt 
Sustainability Analysis, and the stochastic projections indicate that debt would decline 
with a sufficiently high probability.  

Therefore, based on the plan’s policy commitments and macroeconomic assumptions, 
the  maximum  growth  rates  of  net  expenditure  put  forward  in  the  plan  are  consistent 

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with  the requirement for debt  as set  out in  Articles 6, point (a), and  Article 16(2) of 
Regulation (EU) 2024/1263. 

Implications  of  the  plan’s  net  expenditure  commitments  for  the  general  government 
balance 

(23) 

Based on the plan’s maximum growth rates of net expenditure and assumptions, the 
general  government  deficit  would  decline  from  2.7%  of  GDP  in  2024  to  1.8%  in 
2029 and 1.1% of GDP at the end of the adjustment period (2031). Thus, according 
to  the  plan,  the  general  government  balance  would  not  exceed  the  3%  of  GDP 
reference value at the end of the adjustment period (2031), although it is projected to 
exceed that value in the early years of the plan. 

In  addition,  in  the  ten  years  following  the  adjustment  period  (i.e.  until  2041),  the 
government  deficit  would  not  exceed  3%  of  GDP.  Therefore,  based  on  the  plan’s 
policy commitments and macroeconomic assumptions, the maximum growth rates of 
net  expenditure  put  forward  in  the  plan  are  consistent  with  the  requirement  for  the 
deficit as set out in Article 16(2) of Regulation (EU) 2024/1263. 

Time profile of the fiscal adjustment 

(24) 

Based on the time profile of the annual change in the structural primary balance, the 
plan  follows  a  non-linear  adjustment,  with  expansionary  policies  in  2025-2026 
driven  by  increased  spending  (see  recital  27),  and  significant  consolidation  over 
2027-2029.  The  initial  expansionary  fiscal  stance  in  the  first  years  of  the  plan  is 
intended  to  support  activity  and  investment  following  two  years  of  negative  real 
GDP  growth.  Overall,  the  maximum  growth  rates  of  net  expenditure  over  the  five-
year  period  of  the  plan  are  consistent  with  the  no-backloading  safeguard  clause  set 
out  in  Article  6,  point  (c),  of  Regulation  (EU)  2024/1263,  as  the  fiscal  adjustment 
effort over the period of the plan (2025-2029) is proportional to the total effort over 
the entire adjustment period (2025-2031).  

Table 4: Structural primary balance developments in Germany’s plan  

2024 

2025 

2026 

2027 

2028 

2029 

2030 

2031 

-0.9 

-1.3 

-1.8 

-1.2 

-0.3 

0.5 

0.8 

1.1 

0.3 

-0.4 

-0.5 

0.6 

0.9 

0.8 

0.3 

0.3 

Structural 
primary 
balance 

(% of GDP) 

Change in 
structural 
primary 
balance 

(pps.) 

Source: Medium-term fiscal-structural plan of Germany 

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Specific considerations for the application of the deficit resilience safeguard and the debt 
sustainability  safeguard  in  the  case  of  Germany  during  the  activation  of  the  national 
escape clause 

(25) 

According  to  Article  8  of  Regulation  (EU)  2024/1263,  the  fiscal  adjustment  is  to 
continue, where needed, until the Member State concerned reaches a deficit level that 
provides a common resilience margin in structural terms of 1.5% of GDP relative to 
the deficit reference value of 3% of GDP (deficit resilience safeguard). According to 
Article  7  of  Regulation  (EU)  2024/1263,  the  projected  debt  ratio  is  required  to 
decrease by a minimum annual average amount of 0.5 percentage points  as long as 
the debt-to-GDP ratio remains between 60% and 90% (debt sustainability safeguard). 

If the conditions of activation of the national escape clause are fulfilled, and for the 
duration  of  this  activation,  the  allowed  flexibility  should  be  calculated  net  of  the 
impact  of  these  two  safeguards  to  ensure  equal  treatment  among  Member  States. 
Therefore, in  this specific circumstance, the assessment  of the medium-term fiscal-
structural  plan  and  the  assessment  of  the  request  for  the  activation  of  the  national 
escape clause should be done in an integrated way. In particular, given the activation 
of  the  national  escape  clause,  there  is  no  need  to  verify  whether  the  medium-term 
plan of Germany is consistent with the safeguards for the 2025-2028 period covered 
by the national escape clause. For the rest of the adjustment period (2029-2031), as 
the national escape clause will no longer apply, there is a need to verify whether the 
medium-term fiscal-structural plan of Germany respects the safeguards.  

The  requirement  set  out  in  Article  8  of  Regulation  (EU)  2024/1263  regarding  the 
deficit resilience safeguard, which aims to provide a common margin relative to the 
deficit reference value of 3% of GDP, applies to Germany as of 2029. In 2029, 2030 
and  2031,  in  accordance  with  Article  8  of  Regulation  (EU)  2024/1263,  the  annual 
adjustment  in  the  structural  primary  balance  expected  in  the  medium-term  plan 
should therefore not be less than 0.25% of GDP if the structural deficit is expected to 
remain  above  1.5%  of  GDP  in  the  preceding  year,  to  achieve  a  common  resilience 
margin  in  structural  terms  of 1.5% of GDP. The fiscal  adjustment  that results  from 
the  plan’s  policy  commitments  and  assumptions  exceeds  0.25%  of  GDP  in  2029, 
2030  and  2031.  Therefore,  based  on 
the  plan's  policy  commitments  and 
macroeconomic  assumptions,  the  maximum  growth  rates  of  net  expenditure  put 
forward in the plan are consistent with the deficit resilience safeguard for the period 
2029-2031. 

In accordance with Article 7 of Regulation (EU) 2024/1263, as general government 
debt will be above 60% of GDP (but below 90% of GDP) over the adjustment period 
according to the plan, the debt ratio is required to decline by at least 0.5 percentage 
point on average per year until it falls below 60%. The average decline is calculated 
over the period 2029-2031 and amounts to 0.8 percentage points. Therefore, based on 
the  plan’s  policy  commitments  and  macroeconomic  assumptions,  the  maximum 
growth rates of net expenditure put forward in the plan are consistent with the debt 
sustainability safeguard for the period 2029-2031. 

Macroeconomic assumptions of the plan 

(26) 

The  plan  is  based  on  a  set  of  assumptions  which  differs  to  some  extent  from  the 
Commission’s  assumptions  underpinning  the  reference  trajectory  transmitted  to 
Germany  on  17  June  2025  (see  Table  5).  In  particular,  the  plan  uses  different 

EN 

9 

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assumptions for the starting position in 2024, for potential growth and for the GDP 
deflator,  by  taking  on  board  more  recent  data.  A  careful  assessment  of  these 
differences is  necessary, especially  as average  maximum  net  expenditure growth  in 
the plan is higher than the reference trajectory. The differences in assumptions with 
the  most  significant  impact  on  average  net  expenditure  growth  are  listed  below, 
together with an assessment of each difference considered in isolation.  

The plan uses  smoothed potential output growth  over the period  2024-2029, which 
results  in  higher  average  potential  output  over  the  adjustment  period  in  the  plan 
compared  to  the  Commission’s  assumptions  and  therefore  contributes  to  higher 
average  net  expenditure  growth.  The  possibility  to  use  a  more  stable  series  for 
potential growth is granted by Article 36(1), point (f), of Regulation (EU) 2024/1263, 
provided  that  cumulative  growth  over  the  projection  horizon  (i.e.  up  to  2038)  is 
broadly  in  line  with  the  Commission’s  assumptions  and  the  application  is  duly 
justified  by  economic  arguments,  which  is  the  case  in  the  plan.  In  the  plan,  the 
application  of  potential  growth  smoothing  is  justified  by  higher  uncertainty  in  the 
estimation  due  to  recent  macroeconomic  external  shocks.  Consequently,  this 
assumption  is  deemed  to  be  duly  justified.  The  plan  states  that  Germany's  fiscal 
stimulus  package  (primarily  driven  by  its  new  Special  Fund  for  Infrastructure  and 
Climate Neutrality) is likely to further boost economic activity in later years through 
the expected additional public and private investment.  

Table 5: Main assumptions in Germany’s plan 

Extension of the 
adjustment period 

2024 

2025 

2026 

2027 

2028 

2029 

2030 

2031  Average 
over the 
period of 
validity 
of the 
plan 

Average 
over the 
adjustme
nt period 

2025 – 
2031 

2025-
2029 

0.5 

0.9 

0.9 

0.9 

0.9 

0.9 

0.9 

0.9 

0.9 

0.9 

3.1 

2.7 

2.6 

2.6 

2.6 

2.5 

2.5 

2.4 

2.6 

2.6 

Potential 
GDP 
growth (%) 

Inflation 
(GDP 
deflator 
growth) 
(%) 

Source: Medium-term fiscal-structural plan of Germany and Commission calculations.  

The plan assumes  somewhat  higher GDP  deflators for 2025  and 2026 compared to 
the Commission’s assumptions. The higher deflators contribute to  a higher average 
net  expenditure  growth  over  the  adjustment  period  in  the  plan.  The  difference 
between the GDP deflator in 2025 in the Commission’s assumptions and that in the 
plan  is  justified  by  more  recent  data  for  the  first  quarter  of  2025  that  were  not 

EN 

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included  in  the  Commission’s  assumptions.13  The  difference  in  GDP  deflators  for 
2026  can  be  justified  by  price  effects  of  global  trade  tensions  and  the  significant 
expected  increase  in  public  spending.  Taken  together,  these  arguments  duly  justify 
this deviation in deflators vis-à-vis the Commission figures. 

The updated headline deficit in 2024 included in the plan does not have a significant 
impact  on  average  net  expenditure  growth  compared  to  the  Commission’s 
assumptions. This implies that the difference between the maximum growth rates of 
net expenditure in the plan and the reference trajectory is explained by differences in 
assumptions  that  overall  can  be  accepted,  in  line  with  Article  13,  point  (b),  of 
Regulation  (EU)  2024/1263.  Overall,  all  the  differences  in  assumptions  taken 
together lead to an average net expenditure growth in the plan that is higher than the 
reference trajectory.  

The  Commission  will  take  into  account  the  above  assessment  of  the  plan’s 
assumptions in future assessments of compliance with the maximum growth rates of 
net expenditure. 

Fiscal strategy of the plan 

(27) 

According  to  the  indicative  fiscal  strategy  in  the  plan,  the  commitments  on  net 
expenditure will be delivered through  pursuing a growth-oriented strategy based on 
public investments, structural reforms and gradual consolidation.  The plan features a 
path with deferred adjustment, with an expansionary policy stance in 2025 and 2026. 
The expansion is to a significant degree due to higher investment-oriented spending 
(see Table 6), which addresses sluggish economic growth and underinvestment, and 
which  is  to  a  significant  degree  financed  by  a  newly  created  Special  Fund  for 
Infrastructure  and  Climate  Neutrality.  The  fund  safeguards  investment-oriented 
spending by the requirement that only expenditures exceeding a pre-defined share of 
investment  spending  in  the  federal  budget  are  financed.  The  fiscal  expansion  is 
followed  by  significant  consolidation  efforts  in  2027,  2028  and  2029.  The 
consolidation strategy includes higher revenues by growth-enhancing measures such 
as cutting bureaucracy costs by 25% through digitalisation and legal simplification, 
closing  financing  gaps  in  the  area  of  expansion  and  innovation  capital,  and 
expanding  skilled  labour  supply  via  incentives  to  raise  participation  in  the  labour 
market and improved immigration processes. On the expenditure side, the medium-
term  plan reports on the intention of the  government  to conduct  a  recurring review 
and  streamlining  of  all  subsidies  and  funding  programmes,  consolidate  social 
benefits, and reduce staff in ministries and the national parliament administration by 
at least 8% by 2029. The specification of these intentions and the policy measures to 
be adopted is to be confirmed or adjusted and quantified in the annual budgets. 

13 

Data for the second quarter, published after the plan was submitted, further justify the difference in the 
2025 GDP deflator. 

EN 

11 

  EN 

 
 
 
Set of reform and investment commitments in the plan to underpin an extension of the 
fiscal adjustment period  

(28) 

In  the  plan,  Germany  commits  to  a  set  of  reforms  and  investments,  aiming  to 
improve  potential  growth  and  fiscal  sustainability,  to  underpin  an  extension  of  the 
fiscal adjustment period from 4 to 7 years. 

The  set  of  reforms  and  investments  underpinning  an  extension  of  the  adjustment 
period is composed of two commitments from Germany’s Recovery and Resilience 
Plan (RRP) as well as 15 new reforms and investments. This includes the following 
measures (see also Annex II): 

– 

– 

– 

– 

– 

– 

– 

Federal-Länder  working  group  for  an  efficient  public  administration:  The 
measure is a commitment under the RRP (measure 6.2.1) to make governance 
more effective and to better coordinate planning and permitting procedures on 
Federal  and  Länder-level.  The  first  two  steps  consist  of  the  publication  of 
progress reports of the working group by 2021 and 2022, respectively. With the 
third step, at least 80% of the measures from the second progress report should 
be implemented by Q1 2025.   

Offshore  Wind  Energy  Act:  The  measure  is  a  commitment  under  the  RRP 
(measure  7.1.5)  to  create  the  conditions  for  an  accelerated  deployment  of 
offshore  wind  turbines.  By  Q1  2023,  the  Offshore  Wind  Energy  Act  entered 
into  force  and  thereby  reduced  barriers  to  the  development  of  renewable 
energies and the necessary grid infrastructure by simplifying the planning and 
permitting procedures for relevant projects. 

Operationalisation  of  the  Special  Fund  for  Infrastructure  and  Climate 
Neutrality:  The  reform  aims  to  strengthen  the  financial  framework  to  address 
urgent  public  investment  needs  for  national  infrastructure.  Following  the 
creation  of  the  Special  Fund  for  Infrastructure  and  Climate  Neutrality, 
legislation establishing the rules on how the funds are to be spent, particularly 
the additionality criterion for investment, should enter into force by Q3 2025.  

Research allowance to support R&D: This measure aims to strengthen business 
R&D activities through fiscal  incentives. The  reform involves adopting a law 
to extend the tax base and eligible expenditure of the research allowance by Q1 
2026.  

Reduction  of  administrative  burden:  The  goal  of  this  measure  is  to  reduce 
bureaucratic  burdens  on  businesses,  citizens,  and  administration.  Remedial 
laws. 
measures  will  be  bundled 
Legislation is expected to be adopted by Q4 2027.  

into  administrative  burden  reduction 

Simplification of procurement law for the Armed Forces:  This  measure  seeks 
to  reduce red tape and enable investment  by simplifying procurement law for 
the Federal  Armed  Forces by extending the scope for simplified procurement 
procedures, speeding up, and digitalising procedures. By Q2 2026, legislation 
is expected to enter into force. 

Simplification  of  procurement  law:  Similar  to  the  previous  measure,  this 
reform  aims  to  reduce  red  tape  and  enable  investment  by  simplifying 
procurement 
the  scope  for  simplified  procurement 
procedures, speeding up, and digitalising procedures. By Q2 2026, legislation 
is expected to enter into force. 

law  by  extending 

EN 

12 

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– 

– 

– 

– 

– 

– 

– 

– 

Facilitating  employment  after  reaching  retirement  age:  This  measure  aims  to 
improve  labour  supply  by  removing  disincentives  to  continue  work  after  the 
regular retirement age. The reform involves lifting the ban on pre-employment 
(employers  being  banned  from  offering  a  temporary  contract  to  workers 
previously  employed)  to  facilitate  the  temporary  return  to  the  labour  market 
after reaching retirement age by Q2 2026. 

Digital one-stop shop for qualified third-country nationals: This measure aims 
to improve labour supply by facilitating highly qualified migration. The reform 
involves starting a central IT platform for foreign professionals by Q4 2029. 

Expansion of work opportunities for temporary residents: This measure aims to 
improve  labour  supply  by  increasing  labour  market  participation  of  refugees. 
The reform involves reducing bans to work for refugees to a maximum of three 
months by changing the relevant legislation by Q4 2028. 

Extension of the tobacco tax: This measure aims to safeguard tax revenues and 
strengthen public health protection. The reform involves adopting a law for an 
extension of the tobacco tax model by Q4 2026. 

Facilitating  housing  investment  (Housing  Turbo):  This  measure  aims  to 
increase  housing  investment  by  simplifying  housing  construction  regulations. 
The  reform  involves  simplifying  the  legislation  for  housing  construction 
through  temporary  rule  exemptions,  more  flexible  planning,  extended  special 
regulations, and clearer noise conflict guidelines by Q1 2026. 

Set  up  of  a  government-backed  Venture  Capital  fund:  This  measure  aims  to 
improve access to finance for start-ups by mobilising capital from institutional 
investors. The reform involves starting the fundraising for the “Growth fund II” 
targeted at institutional investors with the government as an anchor investor by 
Q4 2026. 

Report  on  government  subsidies:  This  measure  aims  to  facilitate  fiscal 
policymaking  by  showing  the  efficiency  and  effectiveness  of  subsidies.  The 
reform involves publishing two federal subsidy reports that analyse the impact 
of  subsidised  programs  following  the  subsidy  policy  guidelines  by  Q4  2025 
and Q3 2027. 

Spending  reviews:  This  measure  aims  to  inform  fiscal  policy-making  by 
identifying potential areas for cost savings and realigning existing expenditures 
with  new  spending  priorities.  The  first  spending  review  (being  the  12th 
spending  review  of  the  Ministry  of  Finance  (MoF))  will  focus  on  improving 
performance  budgeting.  It  will  be  published  by  Q4  2025.  The  forthcoming 
spending  reviews  (at  least  two)  will  examine  key  policy  domains,  including 
existing measures, support programmes, and statutory services as well as cross-
cutting topics spanning the full extent of the budget.  They will be published at 
the latest  by  Q4 2028 and Q4 2029.  By focusing on the aims and impacts  of 
federal spending, spending reviews pave the way for improved target-oriented 
and outcome-oriented budget management. Conclusions and recommendations 
of the spending reviews will be applied in the budget planning process.  

– 

Improving conditions for geothermal energy investments: This measure aims to 
remove  barriers  to  investment  by  simplifying  the  regulation  for  geothermal 
energy investments. The reform involves simplifying authorisation procedures 
through a Geothermal Energy Acceleration Act by Q2 2026. 

EN 

13 

  EN 

– 

Improving conditions for hydrogen investments: This measure aims to remove 
barriers to investment by simplifying the regulation for hydrogen investments. 
The reform involves simplifying planning, permitting, and related procurement 
procedures through a Hydrogen Acceleration Act by Q3 2026. 

In line with Article 14(3) of Regulation (EU) 2024/1263, each reform and investment 
underpinning  an  extension  of  the  adjustment  period  is  sufficiently  detailed,  front-
loaded, time-bound and verifiable. 

The  RRP  commitments  underpinning  the  extension  contain  significant  reforms  and 
investments  aimed  at  improving  fiscal  sustainability  and  enhancing  the  growth 
potential  of  the  economy.  In  addition,  Germany  commits  to  continuing  the  reform 
effort  over  the  period  covered  by  the  medium-term  fiscal-structural  plan  and 
maintaining  the  nationally  financed  investment  levels  realised  over  the  period 
covered  by  the  RRP  (see  below,  Table  6).  The  commitments  will  be  monitored 
throughout  the  implementation  of  the  plan.  Accordingly,  commitments  under  the 
RRP can be taken into account for the extension of the adjustment period as provided 
by Article 36(1), point (d), of Regulation (EU) 2024/1263. 

The  set  of  reforms  and  investments  underpinning  the  extension  is  expected  to 
improve the growth and resilience potential of Germany’s economy in a sustainable 
manner as  required by  Article 14(2), point (a), of Regulation  (EU) 2024/1263. The 
plan estimates that the package will have a positive economic impact of around 1.0% 
of  2029  GDP  in  2029.  This  estimation  was  done  using  the  Commission’s  dynamic 
stochastic general equilibrium models (QUEST III). Most of the growth effects stem 
from three measures: 

– 

– 

– 

The  operationalisation  of  the  Special  Fund  for  Infrastructure  and  Climate 
Neutrality  is  expected  to  contribute  to  a  higher  share  of  investment,  which  is 
estimated to increase GDP over the period of the plan. The estimation is in line 
with  analysis  provided  in  the  Commission  Spring  Forecast  2025  on  the 
macroeconomic  effects  of  the  Special  Fund  for  Infrastructure  and  Climate 
Neutrality. 

laws  and 

The  administrative  burden  reduction 
in 
procurement  law  are  set  to  improve  efficiency  and  create  productivity  gains. 
The reduction of overhead costs leads to a higher profitability of firms. This is 
in line with published estimates of the effects of a reduction in administrative 
burden14.  The  risk  of  a  reduction  of  overall  employment  seems  low  as  the 
German labour market is tight.     

the  simplifications 

The measures to facilitate skilled migration and expanding work opportunities 
for  refugees  improve  labour  supply  and  thereby  growth.  These  estimates  are 
based  on  scenarios  from  two  studies  on  migratory  movements,  one  of  which 
was produced by the Kiel Institute on request from the Ministry of Economy.15 

model 

See  e.g.  Roeger  et  al  (2008):  Structural  Reforms  in  the  EU:  A  simulation-based  analysis  using  the 
QUEST 
growth, 
https://ec.europa.eu/economy_finance/publications/pages/publication13531_en.pdf 
Institut  für  Weltwirtschaft  Kiel  (2021):  Analyse  und  Prognose  von  Migrationsbewegungen, 
https://www.ifw-kiel.de/fileadmin/Dateiverwaltung/IfW-Publications/fis-import/712bf76b-fed4-4ad6-
b827-4a5a04f42a3b-wipo_34.pdf;  Destatis: 
https://www.destatis.de/DE/Themen/Gesellschaft-
Umwelt/Bevoelkerung/Bevoelkerungsvorausberechnung/begleitheft.html 

15.  Koordinierte  Bevölkerungsvorausberechnung, 

endogenous 

with 

(29) 

(30) 

(31) 

14 

15 

EN 

14 

  EN 

 
(32) 

(33) 

Overall,  the  plan  is  expected  to  improve  the  growth  and  resilience  potential  of  the 
economy  by  addressing  previously  identified  weaknesses  such  as  the  lack  of 
investment and decreasing labour supply.   

The set of reforms and investments underpinning the extension is expected to support 
fiscal  sustainability  as  required  by  Article  14(2),  point  (b),  of  Regulation  (EU) 
2024/1263. The government expects an overall fiscal effect of the set of reforms and 
investments  of  1.0%  of  2024  GDP  in  2029.  This  is  mostly  through  indirect  effects 
(0.9%),  reflecting  the  focus  on  growth-enhancing  reforms.  The  extension  of  the 
tobacco tax will increase tax revenues. Additionally, spending reviews and a subsidy 
review will help to improve the quality of public finances. 

The  set  of  reforms  and  investments  underpinning  the  extension  addresses  the 
common  priorities  of  the  EU  as  required  by  Article  14(2),  point  (c),  of  Regulation 
(EU)  2024/1263.  Most  of  the  measures  are  expected  to  contribute  to  social  and 
economic  resilience,  in  line  with  the  principles  of  the  European  Pillar  of  Social 
Rights.  Furthermore,  the  acceleration  laws  for  geothermal  energy  and  hydrogen 
investment  contribute  to  a  fair  green  and  digital  transition  as  well  as  to  ensuring 
energy security together with  the  Offshore Wind  Energy Act.  The simplification of 
the procurement law and the use of digital technologies in procurement processes for 
the Armed Forces addresses the build-up of defence capabilities.  

(34) 

The  set  of  reforms  and  investments  underpinning  the  extension  addresses  the 
relevant16  Country-Specific  Recommendations  (CSRs)  issued  as  part  of  European 
Semester as  required by  Article 14(2), point (d),  of Regulation  (EU) 2024/1263.  In 
particular,  the  set  of  reforms  and  investment  underpinning  an  extension  address 
CSRs related to:  

– 

– 

– 

– 

Fiscal-structural recommendations through public investment-enabling reforms 
including  the  operationalisation  of  the  Special  Fund  for  Infrastructure  and 
Climate  Neutrality  and  the  simplification  of  procurement  law  as  well  as  the 
extension of the  tobacco  tax, spending  reviews  and the  report on government 
subsidies.  

Recommendations  with  regard  to  the  transformation  of  the  economy  by  the 
extension  of  the  research  allowance  to  support  R&D,  the  reduction  of 
administrative  burden  including  by  using  digital  technologies,  facilitating 
housing investment and setting up a government-backed Venture Capital fund. 

Recommendation  with  regard  to  the  green  transition  to  reduce  the  overall 
dependency on imported fossil fuels and facilitate the role of renewable energy 
in  the  energy  system  by  improving  the  conditions  for  offshore  wind  energy, 
geothermal  energy  and  hydrogen  investments,  as  well  as  electrification  and 
flexibility.   

Recommendation with regard to the labour market by facilitating employment 
after reaching retirement age, a digital one-stop shop for qualified third-country 
nationals and the expansion of work opportunities for temporary residents.  

16 

CSRs considered ‘relevant’ are recommendations: i) referred to in the Council Implementing Decision 
on the approval of the assessment of the recovery and resilience plan for measures included in the RRP 
and ii) adopted by the Council in 2025. 

EN 

15 

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(35) 

The  plan  ensures  that  the  planned  overall  level  of  nationally  financed  public 
investment realised on average over the period covered by the RRP is maintained, as 
required by Article 14(2) point (e) of Regulation (EU) 2024/1263. 

Table 6: Nationally financed public investment in the plan (% of GDP) 

Average 
level over 
the period 
covered by 
the RRP 
(2021 to 
2026) (17) 
2.9 

2025 

2026 

2027 

2028 

2029 

Average 
over the 
duration of 
the plan 

3.3 

3.5 

3.5 

3.7 

3.8 

3.5 

Source: Medium-term fiscal-structural plan of Germany. 

(36) 

(37) 

Finally,  the  set  of  reform  and  investment  commitments  underpinning  an  extension 
can be regarded as consistent with the commitments in the RRP and the Partnership 
Agreement  agreed  under  the  Multiannual  Financial  Framework  as  required  by 
Article 14(4) of Regulation (EU) 2024/1263.  

In conclusion, the set of reforms and investments underpinning the extension of the 
adjustment period is assessed as fulfilling, taken altogether, the criteria in Article 14 
of  Regulation  (EU)  2024/1263.  As  a  result,  the  adjustment  period  can  be  extended 
from 4 to 7 years, as put forward in the plan. 

Other reform and investment intentions in the plan responding to the main challenges 
identified in the context of the European Semester and addressing the common priorities 
of the Union 

(38) 

Besides  the  set  of  reforms  and  investments  underpinning  an  extension  of  the 
adjustment period, the plan describes policy intentions concerning other reforms and 
investments  to  respond  to  the  main  challenges  identified  in  the  context  of  the 
European Semester, especially the Country-Specific Recommendations (CSRs), and 
to  address  the  common  priorities  of  the  Union.  The  plan  includes  35  reforms  and 
investments, of which four are financially supported by the Recovery and Resilience 
Facility.  The  plan’s  reforms  and  investments  are  partly  based  on  an  existing 
government  strategy  document  (‘Responsibility  for  Germany,  Coalition  Agreement 
between CDU, CSU and SPD, 21. Legislative period”).18 

(39) 

Concerning the common priority of a fair green and digital transition, including the 
climate  objectives  set  out  in  Regulation  (EU)  2021/1119,  the  plan  provides  for 
training  measures,  for  example,  regarding  the  digitalisation  of  trainings  and  to 

17 

18 

It is assumed and accepted that the two periods will overlap. The requirement to maintain the level of 
investment is intended to apply to the years after the end of the lifetime of the Recovery and Resilience 
Facility. 
Verantworung 
Legislaturperiode, 
https://www.koalitionsvertrag2025.de/sites/www.koalitionsvertrag2025.de/files/koav_2025.pdf 

für  Deutschland,  Koalitionsvertrag  zwischen  CDU,  CSU  und  SPD,  21. 

EN 

16 

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involvement 

encourage digital participation of learners. In addition, the plan includes reforms and 
investments  aiming  at  the  expansion  of  digital  networks  by  determining  an 
overriding  public  interest  for  network  expansion  and  simplifying  planning  and 
approval.  Furthermore,  the  plan  aims  to  improve  access  to  justice  by  introducing 
online procedures in civil justice as well as the simplification of notarial procedures 
by the introduction of a digital authentication procedure for notaries and other deeds. 
The  plan  also  includes  the  adoption  of  common  digital  standards  for  public 
administration  to  ensure  uniform  and  barrier-free  access  to  administrative  services 
(included  in  the  RPP),  and  a  law  to  modernise  and  digitalise  the  fight  against 
undeclared work. The plan also describes measures to encourage the construction of 
dispatchable  power  plants,  the  development,  conversion  and  new  construction  of 
climate neutral heat networks (included in the RRP) as well as the targeted expansion 
of electricity networks. Furthermore, the plan contains a package of measures aimed 
at  reducing  tax  components  of  electricity  prices  for  commercial  consumers  and 
ensuring  a  greater  State 
to 
competitiveness  and  electrification, 
the  regulatory  environment  for 
CCS/CCU,  and  the  continuation  of  the  funding  for  heating  and  renovation  for 
efficient buildings (included in the RRP) as well as an increase in federal funding for 
efficient  and  climate  neutral  heating  networks.  The  plan  provides  for  the 
rehabilitation  of  the  rail  network  by  upgrading  high-performance  corridors.  To 
strengthen governance and long-term investment planning in rail, the plan introduces 
the “Infraplan” as a binding funding tool prioritising future projects. E-mobility will 
be  promoted  through  tax  incentives,  car  tax  exemptions,  targeted  support  for  low-
income  households,  and  investment  in  charging  infrastructure  and  zero-emission 
freight  mobility  (included  in  the  RRP).  Finally,  the  plan  supports  innovation  and 
technological  progress  by  prioritising  research  funding  under  the  high-tech  agenda, 
with  a  focus  on  key  technologies  such  as  AI,  biotechnology  and  climate  solutions, 
and by fostering stronger links between research and industry. These measures and 
others  in  the  plan  intend  to  contribute  to  the  implementation  of  the  2025  CSR  on 
skills,  vocational  education  and  training  &  adult  learning,  public  administration, 
digital infrastructure, the digitalisation of public administration and public services, 
energy efficiency, transport, renewable energy, energy infrastructure & networks and 
research & innovation. 

in  network  costs 

to  contribute 

improve 

(40) 

Concerning  the  common  priority  of  social  and  economic  resilience,  including  the 
European Pillar of Social Rights, the plan includes reforms and investments aiming 
to  improve  employment  incentives  and  speed  up  labour  market  integration  by 
restructuring  the  basic  income  support  (Grundsicherung)  for  job  seekers.  A 
Commission  on  welfare  state  reform  is  expected  to  present  recommendations  for 
modernising and reducing bureaucracy in the welfare system and its administration. 
To increase incentives for an expansion of gainful employment, the plan provides for 
the introduction of tax exemptions for overtime supplements. Furthermore, the plan 
also  provides  for  measures  for  equity  through  education  like  providing  targeted 
support to schools with a high proportion of socially disadvantaged pupils, additional 
support for  early  childhood education and  care (ECEC) in  disadvantaged areas and 
for  those  that  focus  on  promoting  children’s  language  development  as  well  as  for 
improving the infrastructure for all ECEC. In addition, the plan provides for a bundle 
of up- and reskilling training measures, for example, to enhance vocational training, 
life-long  learning,  regarding  the  digitalisation  of  trainings  and  support  for  in-
company  training.  To  improve  educational  opportunities,  the  plan  extends  the 
investment programme for full-day school care. In addition, infrastructure procedures 

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will be accelerated through harmonised procedural  law. As a further step to  reduce 
bureaucracy,  process  improvement  reviews  will  be  introduced  in  order  to  identify 
and address the biggest obstacles in administrative procedures. Social benefits are to 
be better aligned and digitalised to simplify access and reduce bureaucracy. The plan 
aims at reducing electricity costs by tax relief and federal co-financing of grid fees, 
supporting  electrification.  Long-term  private  savings  will  be  supported  by 
introducing an early start pension for children. The plan provides for the inclusion of 
new self-employed in the statutory pension system which aims to strengthen old-age 
security. It also aims at increasing labour supply by providing tax incentives for work 
beyond  retirement  age.  Access  to  care  will  be  improved  through  a  primary  care 
system,  emergency  and  rescue  service  reform,  and  hospital  restructuring,  while  a 
long-term  care  reform  aims  to  ensure  sustainability  and  reduce  burdens  on 
contributors.  The  rail  network  is  to  be  modernised  through  targeted  corridor 
rehabilitation.  Business  investment  will  be  stimulated  by  reintroducing  accelerated 
depreciation and reducing corporate tax rates. Access to finance will be expanded by 
improving funding for SMEs and start-ups. Finally, the plan supports innovation by 
prioritising research in key technologies such as AI, biotech and climate tech. These 
measures  and  others  in  the  plan  intend  to  contribute  to  the  implementation  of  the 
2025  CSRs  on  taxation  policy,  the  business  environment,  the  pension  systems  and 
active  aging,  public  administration,  the  functioning  of  the  labour  market,  skills, 
vocational  education and training & adult learning,  education, energy infrastructure 
& networks, research & innovation and transport. The measures in the plan are also 
intended  to  help  improve  housing  affordability  by  aiming  to  increase  the  housing 
supply. 

Concerning  the  common  priority  of  energy  security,  the  plan  includes  reforms  and 
investments that intend to improve the resilience and flexibility of the energy system. 
The  plan  describes  measures  to  encourage  the  construction  of  dispatchable  power 
plants  as  well  as  the  development,  conversion  and  new  construction  of  climate 
neutral heat networks (included in the RRP). The plan also includes measures for the 
targeted and system-friendly deployment of networks and storage, intended to align 
grid  expansion  with  electricity  demand  and  renewable  generation.  These  measures 
and others in the plan intend to contribute to the implementation of the 2025 CSRs 
on  the  renewable  energy,  energy  infrastructure  &  networks,  energy  efficiency  and 
transport.  

Concerning  the  common  priority  of  defence  capabilities,  the  plan  includes  reforms 
and investments that underpin the extension of the adjustment period (see recital 32).   

In  addition,  the  plan  includes  other  policy  measures  going  beyond  the  common 
priorities  of  the  EU,  including  a  federal-state  pact  to  accelerate  planning  and 
permitting procedures, the extension of the rules to cap the overall regulatory burden, 
and  the  strengthening  of  the  National  Regulatory  Control  Council  aimed  at 
improving oversight of regulatory impacts. 

The  plan  provides  information  on  the  consistency  and,  where  appropriate, 
complementarity  with  Germany’s  RRP.  The  plan  includes  measures  from  the  RRP 
such  as  the  development,  conversion  and  new  construction  of  climate  neutral  heat 
networks and the continuation of the funding for heating and renovation for efficient 
buildings.  Furthermore,  it  includes  the  promotion  of  e-mobility  through  tax 
incentives,  car  tax  exemptions,  targeted  support  for  low-income  households,  and 
investment  in  charging  infrastructure  and  zero-emission  freight  mobility.  Lastly,  it 

(41) 

(42) 

(43) 

(44) 

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(45) 

contains  the  adoption  of  common  digital  standards  for  public  administration  to 
ensure uniform and barrier-free access to administrative services.  

The plan provides an overview of the public investment needs of Germany related to 
the common priorities of the EU. To support a fair green and digital transition,  the 
plan states that substantial investments are required in renewable energy, electricity 
grids,  energy  efficiency,  hydrogen  infrastructure,  net-zero  technologies,  and  the 
digital modernisation of public services. To enhance social and economic resilience, 
investment  is  needed  to  reduce  strategic  dependencies,  boost  research  and 
innovation,  and  strengthen  competitiveness,  particularly  through  support  for  key 
technologies such as  microelectronics, AI, quantum, and biotech. To ensure energy 
security,  the  German  authorities  see  investment  needs  regarding  LNG  import 
infrastructure  and  flexible,  low-emission  gas  power  plants,  intended  to  support  the 
transition  and reduce reliance on single suppliers. To build up defence  capabilities, 
the plan provides for significant investment in closing equipment gaps, strengthening 
the  Bundeswehr’s  readiness,  and  fulfilling  NATO  commitments,  supported  by  the 
Bundeswehr special fund and sustained higher defence spending.   

ACTIVATION OF THE NATIONAL ESCAPE CLAUSE  

(46) 

(47) 

The  Heads  of  State  or  Government,  meeting  in  Versailles  on  10-11  March  2022, 
committed  to  bolster  European  defence  capabilities  in  light  of  Russia’s  military 
aggression against Ukraine. These aims were reiterated in the Strategic Compass for 
Security and Defence. In its Conclusions on European defence of 6 March 2025, the 
European  Council  welcomed  the  intention  of  the  Commission  to  recommend  the 
activation, in a coordinated manner, of the national escape clause under the Stability 
and Growth Pact as an immediate measure. 
In  its  Communication  of  19  March  202519,  the  Commission  invited  all  Member 
States  to  make  use  of  the  flexibility  provided  by  the  national  escape  clause  in  a 
coordinated  manner  with  a  view  to  maximising  the  impact  on  the  EU’s  defence 
capabilities.  This  flexibility  aims  at  facilitating  the  transition  to  higher  levels  of 
defence  spending  on  a  permanent  basis.  That  Communication  describes  that  the 
activation of the national escape clause would allow Member States to deviate from 
the maximum growth rates of net expenditure as set by the Council when endorsing 
the  medium-term  fiscal-structural  plans  or  when  establishing  the  corrective  paths 
under the excessive deficit procedure, to the extent that this deviation is justified by 
an  increase  in  defence  spending  relative  to  the  reference  year,  and  that  the  annual 
excess  through  2028  will  not  exceed  1.5%  of  GDP.  Increases  beyond  that  amount 
would  be  subject  to  the  normal  assessments  of  compliance.  Such  a  maximum  is 
necessary  to  ensure  that  fiscal  sustainability  is  not  endangered,  while  allowing  all 
Member States to benefit from the flexibility as they move towards a higher level of 
defence  expenditure.  The  exact  amounts  will  be  determined  when  outturn  data 
become available, to ensure that the additional flexibility is used only for its intended 
purpose. 

(48) 

On 24 April 2025, Germany submitted a request to the Council and the Commission, 
to  activate  the  national  escape  clause  under  Article  26  of  Regulation  (EU) 
2024/1263. 

19 

Commission Communication (C (2025) 2000 final) of 19 March 2025. 

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(49) 

(50) 

In its request, Germany sets out that, in a context of heightened geopolitical tensions, 
Russia’s  continued  war  of  aggression  against  Ukraine  and  its  threat  to  European 
security  constitutes  an  existential  challenge  for  the  Union,  which  requires  a 
significant 
is  an  exceptional 
circumstance outside the control of each Member State. 

increase  of  defence  spending.  This  situation 

Total general government expenditure for defence (COFOG 02 division) in Germany 
amounted to 1.0% of GDP in 2021, 1.0% in 2022 and 1.1% of GDP in 2023 (Table 
7). Based on information provided in the medium-term plan, Germany spends 1.2% 
and  1.5%  of  GDP  in  defence  in  2024  and  2025  respectively.  In  addition  to  this, 
Germany  envisages  to  substantially  increase  its  defence  expenditure  towards  the 
NATO  target  and  to  maintain  the  increased  defence  expenditure  throughout  the 
current legislature. Therefore, the increase in defence expenditure has a major impact 
on the public finances of Germany. 

Table 7: Total defence spending in Germany 

General government total defence 
expenditure  

(% of GDP) 

2021 a 

2022 a 

2023 a 

2024 b 

2025 b 

1.0 

1.0 

1.1 

1.2 

1.5 

Source: a: Eurostat; b: Information provided to the Council and the Commission by Germany. 

(51) 

(52) 

Germany  estimates that the increase in  total  defence expenditure as  a ratio to  GDP 
from  2021  to  2025  will  be  in  the  order  of  0.5  percentage  points  and  therefore 
contribute to deteriorating the government balance and increasing government debt.  

All  else  being  equal,  an  increase  in  expenditure  over  the  period  covered  by  the 
national escape clause will lead to higher government debt and a higher deficit by the 
end of that period. Indicative projections run by the Commission and assuming, by 
2028, a linear uptake of the full increase in government expenditure allowed by  the 
national escape clause suggest that the deficit-to-GDP ratio and debt-to-GDP ratio in 
2028  would  be  2.5 pps.  and  4.8 pps.  higher,  respectively,  than  if  net  expenditure 
grew  in  line  with  the  Commission’s  prior  guidance.  This  would  likely  require  an 
additional  fiscal  adjustment  after  the  period  of  activation  of  the  national  escape 
clause  in  order  to  meet  the  requirements  of  the  fiscal  framework20,  including  to 
ensure  that the debt ratio is put or remains on a plausibly downward path by the end 
of the adjustment period or it remains at  prudent levels below  60% of GDP, and  it 
brings  and  maintains  the  government  deficit  below  3%  of  GDP  over  the  medium 
term.  Germany  acknowledges  in  the  plan  and  in  its  application  for  the  national 
escape  clause  that,  going  forward,  structurally  higher  defence  expenditure  may 

20 

See the addendum to ECFIN Institutional Paper 321: ‘Assessment of the Fiscal Sustainability Condition 
for  Member  States  Requesting  the  Activation  of  the  National  Escape  Clause’,  available  here: 
https://economy-finance.ec.europa.eu/publications/assessment-fiscal-sustainability-condition-member-
states-requesting-activation-national-escape_en 

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(53) 

require policies to preserve fiscal sustainability and compliance with the fiscal rules 
over  the  medium  term.  The  limited  projected  increase  in  deficit  and  debt  levels 
caused  by  the  national  escape  clause,  together  with  Germany’s  commitment  to 
implementing  the  necessary  adjustment  to  fulfil  all  the  requirements  of  the  fiscal 
framework in the next round of plans, ensures  that fiscal sustainability is preserved 
over the medium term. 

to 

General  government  defence  expenditure  data  are  compiled  and  released  by  the 
national  statistical  authorities  and  Eurostat  according 
the  International 
Classification  of  the  Functions  of  Government  (COFOG)  in  the  framework  of  the 
European  System  of  National  Accounts  (ESA2010).  These  data  are  appropriate  to 
assess  the  impact  of  defence  spending  on  government  deficit,  debt  and  net 
expenditure,  and  related  concepts.  Eurostat,  in  close  cooperation  with  the  national 
statistical  authorities,  will  establish  a  data  collection  process.  The  starting  point 
should be COFOG defence categories, while also  considering the NATO definition 
and  retaining  the  possibility  to  address  anomalies  that  might  be  attributable  to 
differences  in  the  respective  annual  reporting  systems.  The  data  collection  process 
needs to be aligned with EDP reporting deadlines. 

(54)  Moreover, for some of the contracts for military equipment signed during the period 
of  activation  of  the  national  escape  clause,  delivery  may  occur  at  a  later  stage, 
therefore impacting public finances only after the period of activation of the clause. 
To cater for this eventuality, the flexibility granted under the national escape clause 
should also apply to defence expenditure linked to such later delivery, provided that 
the corresponding contracts were signed during the period of activation of the clause 
and  that  this  delayed  defence  spending  remains  within  the  overall  cap  mentioned 
above. 

(55) 

The  expenditure  financed  by  loans  provided  by  the  new  instrument  for  Security 
Action  for  Europe  (SAFE)  for  the  reinforcement  of  European  defence  industry, 
would automatically benefit from the above flexibility. To this end, Member States 
would  report  to  Eurostat  all  defence-related  expenditures  made  under  the  SAFE 
Instrument under the categories “defence products” and “other products for defence 
purpose”  as  defined  in  the  proposal  for  a  Regulation  establishing  the  SAFE 
Instrument.  

(56) 

This  recommendation  does  not  modify  the  definitions  of  government  deficit,  debt 
and  net  expenditure,  and  related  concepts.  Data  based  on  these  concepts  are  to  be 
compiled and reported by Germany in accordance with Regulations (EU) 2024/1263, 
No 479/2009 and No 549/2013. 

Conclusion  of  the  Commission’s  assessment  of  the  national  medium-term  fiscal-
structural plan of Germany 

(57) 

Overall, given the activation of the national escape clause, the Commission is of the 
view that Germany’s plan fulfils the requirements of Regulation (EU) 2024/1263.  

OVERALL  CONCLUSION  ON  THE  NATIONAL  MEDIUM-TERM  FISCAL-
STRUCTURAL PLAN OF GERMANY 

(58) 

In accordance with Article 17 of Regulation (EU) 2024/1263, the maximum growth 
rates  of  net  expenditure  committed  to  in  the  plan  should  be  recommended  by  the 

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Council  to  Germany,  and  the  set  of  reforms  and  investments  underpinning  the 
extension of the adjustment period to 7 years should be endorsed. 

HEREBY RECOMMENDS  

1. 

2. 

3. 

4. 

5. 

During the period 2025-2029 Germany ensures that net expenditure growth does not 
exceed the maxima established in Annex I to this Recommendation.  

During  the  period  2025-2028,  Germany  is  allowed  to  deviate  from  and  exceed  the 
maximum growth rates of net expenditure as set by point 1 of this Recommendation 
to the extent that the net expenditure in excess of these maximum growth rates is not 
more than: 

(a) 

the increase in defence expenditure in percent of GDP since 2021;   

(b)  provided  that  the  deviation  in  excess  of  the  maximum  growth  rates  of  net 

expenditure does not exceed 1.5 percent of GDP. 

In  the  years  after  2028,  Germany  may  still  deviate  from  and  exceed  the  maximum 
growth rates of net expenditure as set by a Council Recommendation in accordance 
with  Articles  17  or  19  of  Regulation  (EU)  2024/1263,  to  the  extent  that  the  net 
expenditure  in  excess  of  these  maximum  growth  rates  is  related  to  deliveries  of 
military  equipment  contracted  before  end-2028  and  remains  within  the  overall  cap 
mentioned above.  

In accordance with Article 22(7) of Regulation (EU) 2024/1263, the deviations from 
the maximum growth rates of net expenditure as set by the Council that are allowed 
by  this  Recommendation  will  not  be  recorded  as  debits  in  the  control  account  of 
Germany. 

In  order  to  ensure  correct  recording  of  the  additional  expenditure  Germany  is  to 
include actual and planned data on total defence expenditure (COFOG division 02), 
including defence investment (COFOG division 02 P.51) and any expenditure to be 
financed by SAFE loans that are not covered in COFOG-02: 

(a) 

(b) 

for  years  T-4,  T-3,  T-2  and  T-1  (with  year  T  being  the  current  year)  in  the 
reporting to the Commission (Eurostat) in accordance with Council Regulation 
(EU) No 479/2009;  

for  years  2021  through  year  T  (current  year),  in  national  medium-term  fiscal 
structural  plans  and  in  annual  progress  reports  in  accordance  with  Articles 
11(1) and 15, and 21(1) of Regulation (EU) 2024/1263; 

(c) 

for years T (current year) and T+1 in draft budgetary plans in accordance with 
Regulation (EU) No 473/2013. 

6. Germany implements  the set  of reforms  and investments  that underpins the extension of 
this 

to  7  years,  as  established 

in  Annex  II 

to 

the  fiscal  adjustment  period 
Recommendation, by the indicated deadlines. 

In  addition,  the  Council  invites  Germany  to  ensure  the  delivery  of  other  reforms  and 
investments  responding  to  the  main  challenges  identified  in  the  context  of  the  European 
Semester, in particular in the country-specific recommendations, and addressing the common 
priorities of the Union.  

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ANNEX I 

Maximum growth rates of net expenditure 
(annual and cumulative growth rates, in nominal terms) 

Germany 

Years 

Growth rates (%) 

2029 
1.6 
15.2 
(*) The cumulative growth rates are calculated by reference to the base year of 2024. The 
cumulative growth rates are used in the annual monitoring of ex-post compliance in the 
control account. 

Annual 
Cumulative (*) 

2027 
2.3 
11.5 

2025 
4.4 
4.4 

2028 
1.7 
13.3 

2026 
4.5 
9.0 

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ANNEX II 
Set of reforms and investments that underpins an extension of the adjustment period to seven years 

Reform / investment 
Operationalisation of the 
Special Fund for 
Infrastructure and 
Climate Neutrality 
(new measure) 

Research allowance to 
support R&D 
(new measure) 

Reduction of 
administrative burden 
(new measure) 

Simplification of 
procurement law for the 
Armed Forces 
(new measure) 
Simplification of 
procurement law  
(new measure) 
Facilitating employment 
after reaching retirement 
age 
(new measure) 
Digital one-stop shop for 
qualified third-country 
nationals 
(new measure) 

Main objective 
Specifying the financial framework 
to address urgent public investment 
needs for national infrastructure. 

Description and timing of key steps 
Following the creation of the Special Fund for Infrastructure and Climate 
Neutrality, there will be legislation establishing the rules on how the funds 
are to be spent, particularly the additionality criterion for investment.   

Monitoring indicator(s) 
Step 1: Entry into force 
of legislation 

Strengthen business R & D activities 
through fiscal incentives. 

Step 1: By Q3 2025, adopt the laws for the creation of the Special Fund 
for Infrastructure and Climate Neutrality.  
Step 1: By Q1 2026, adopt a law on the extension of the tax base and 
eligible expenditure of the research allowance.  

Step 1: Entry into force 
of legislation 

Reduce bureaucratic burdens on 
business, citizens and administration.  

Remedial measures  will be  bundled  into  administrative  burden  reduction 
laws. 

Step 1: Adoption of 
legislation 

Reduce red tape and enable 
investment by simplifying 
procurement law for the Federal 
Armed Forces.  
Reduce red tape and enable 
investment by simplifying 
procurement law.  
Improve labour supply by removing 
disincentives to continue work after 
the regular retirement age.  

Improve labour supply by facilitating 
highly qualified migration. 

Step 1: By Q4 2027, adopt legislation on the reduction of administrative 
burden. 
Step 1: By Q2 2026, simplifying procurement laws for the Armed Forces 
by extending the scope for simplified procurement procedures, speeding 
up and digitalising procedures. 

Step 1: Entry into force 
of legislation  

Step 1: By Q2 2026, simplify procurement laws by extending the scope 
for simplified procurement procedures, speeding up and digitalising 
procedures.  
Step 1: By Q2 2026, lift the ban on pre-employment to facilitate the 
temporary return to the labour market after reaching retirement age by 
changing the relevant legislation. 

Step 1: Entry into force 
of legislation  

Step 1: Entry into force 
of legislation 

Step 1: By Q4 2029, start a central IT platform for foreign professionals. 

Step 1: Start of a public 
online IT platform 

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Expanding work 
opportunities for 
temporary residents 
(new measure) 
Extension of the tobacco 
tax  
(new measure) 
Facilitating housing 
investment (Housing 
Turbo)  
(new measure) 
Set up of a government-
backed Venture Capital 
fund  
(new measure) 
Report on government 
subsidies  
(new measure) 

Spending reviews  
(new measure) 

Improve labour supply by increasing 
labour market participation of 
refugees. 

Step 1: By Q4 2028, reduce bans to work for refugees to a maximum of 
three months by changing the relevant legislation. 

Step 1: Entry into force 
of legislation 

Safeguard tax revenues and 
strengthen public health protection. 

Step 1: By Q4 2026, adopt a law for an extension of the tobacco tax 
model. 

Step 1: Entry into force 
of legislation 

Increasing housing investment by 
simplifying housing construction 
regulations.  

Step 1: By Q1 2026, simplify the legislation for housing construction 
through temporary rule exemptions, more flexible planning, extended 
special regulations, and clearer noise conflict guidelines.  

Step 1: Entry into force 
of legislation 

Improving access to finance for start-
ups by mobilising capital from 
institutional investors. 

Step 1: By Q4 2026, start the fundraising for the “Growth fund II” 
targeted at institutional investors with the government as an anchor 
investor.  

Step 1: Letter of 
specification for a VC 
fund  

Facilitating fiscal policymaking, by 
showing the efficiency and 
effectiveness of subsidies. 

Informing fiscal policy making, by 
identifying potential areas for cost 
savings or realigning existing 
expenditures with new spending 
priorities. 

Step 1: By Q4 2025, publish a first federal subsidy report that analyses the 
impact of subsidised programmes following the subsidy policy guidelines. 
Step 2: By Q3 2027, publish a second federal subsidy report that analyses 
the impact of subsidised programmes following the subsidy policy 
guidelines. 
The first spending review (being the 12th spending review of the MoF) 
will be on improving performance budgeting. The next at least two 
spending reviews will be on important policy domains covering existing 
measures, support programmes, statutory services as well as cross-cutting 
topics identified within the full extent of the budget. Conclusions and 
recommendations of the spending reviews will be applied in the budget 
planning process.   
Step 1: By Q4 2025, publish a first spending review. 
Step 2: By Q4 2028, publish a second spending review. 
Step 3: By Q4 2029, publish a third spending review. Assessment will 
take place at time of publication. 

Step 1: Publication of a 
first subsidy report   
Step 2: Publication of a 
second subsidy report. 

 Step 1: Publication of a 
first spending review. 
Step 2: Publication of a 
second spending 
review. 
Step 3: Publication of a 
third spending review. 

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Improving conditions for 
geothermal energy 
investments  
(new measure) 
Improving conditions for 
hydrogen investments  
(new measure) 
Federal-Länder working 
group for an efficient 
public administration 
(RRP reform 6.2.1)  

Removing barriers to investment by 
simplifying the regulation for 
geothermal energy investments.  

Removing barriers to investment by 
simplifying the regulation for 
hydrogen investments.   
Making governance more effective, 
future-oriented and innovation-
friendly; Coordinating planning and 
permitting procedures on Federal and 
Länder-level.  

Step 1: By Q2 2026, simplify authorisation procedures through a 
Geothermal Energy Acceleration Act. 

Step 1: Entry into force 
of legislation 

Step 1: By Q3 2026, simplify planning, permitting and related 
procurement procedures through a Hydrogen Acceleration Act.  

Step 1: Entry into force 
of legislation  

The  working  group  is  set  up  to  publish  reports  from  the  working  group 
with recommendations on grants, planning and permitting.  

Step 1: By Q2 2021, finish a first progress report with recommendation  
Step 2: By Q2 2022, finish second progress report 
Step 3: By Q1 2025, finalise at least 80% of the measures from the 2nd 
progress report.  

Offshore Wind Energy 
Act   
(RRP reform 7.1.5)  

Creating the conditions for an 
accelerated deployment of offshore 
wind turbines.  

Step 1: By Q1 2023, reduce barriers to the development of renewable 
energies and the necessary grid infrastructure by simplifying the planning 
and permitting procedures for relevant projects.  

Done at Brussels, 

For the Council 
The President 

Step 1: Publication of 
the first progress report  
Step 2: Publication of 
the second progress 
report  
Step 3: Finish 80% of 
the actions from the 
second progress report  
(monitored via the 
RRF)   
Step 1: Entry into force 
of the Offshore Wind 
Energy Act 
(monitored via the 
RRF)  

EN 

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EN