Saxon government goes on budget retreat

Saxony's Finance Minister Christian Piwarz (CDU) expects negotiations for the 2027/2028 double budget to be "more difficult than ever before". "While the forecast expenditure is galloping away, the expected revenue is far from keeping pace. In this situation, structural and painful fundamental decisions are necessary," he told the German Press Agency ahead of a two-day budget meeting in Schmochtitz (Bautzen district).

What can the state still afford?

"What can the state still afford and what does it have to say goodbye to? This is not something that can be decided overnight. We need to take our time and deliberate carefully before the state government adopts a draft for the next double budget next summer," emphasized the minister. When adopting the current budget for 2025/2026, he had already pointed out that the real financial challenges were yet to come.

Can Saxony manage without new debt?

As things stand, there is a shortfall of up to 4.2 billion euros for the new double budget in order to continue financing all previous expenditure at the same level. Considerable cuts are therefore expected. Even within the CDU-SPD coalition, there are different ideas on how to deal with the dilemma. The SPD, Greens, Left Party and the BSW believe that borrowing is necessary in order to make investments. The AfD is strictly opposed to this. The CDU also wants a budget without debt.

Länder may take on debt to a limited extent

Following resolutions by the Bundestag and Bundesrat, the Länder can now also borrow to a certain extent. The Basic Law now grants them a credit limit of 0.35 percent of gross domestic product per year. According to estimates, Saxony could borrow between 566 million and 770 million euros, depending on how the regulation is interpreted. However, this would not even begin to fill the existing financing gap.