Budget composition of the federal government: A look at the expenditure side since 1992

This article examines how the federal government’s expenditure is divided between various tasks and how values have shifted over time. To this end, the development of expenditure shares broken down by tasks since the early 1990s is examined. In addition to the shares of certain expenditure in total expenditure, the development of expenditure per capita and expenditure relative to gross domestic product is also examined. This article also looks at how the total level of federal expenditure has developed.

The results show that inflation-adjusted expenditure per inhabitant rose only slowly in the 1990s and 2000s before falling slightly in the 2010s. With the outbreak of the coronavirus pandemic, however, there was a significant increase, which has lifted expenditure above the pre-pandemic level to this day. In 2024, inflation-adjusted federal expenditure per capita was around a third higher than in 1992. However, in relation to gross domestic product, expenditure is lower than at the beginning of the 1990s.

The welfare state has developed dynamically. While the federal government only spent 35 percent of the budget on the welfare state in 1992, this figure had risen to 48 percent by 2024. From the mid-2000s, the proportion was even mostly over 50 percent. Expressed in euros per inhabitant, the figure almost doubled between 1992 and 2024 after adjusting for inflation. Federal grants to social insurance increased significantly, particularly between the mid-1990s and the early 2000s. Labor market-related social benefits rose during the Hartz reforms and have remained at a high level ever since. 

In the general services category, there were only inconspicuous developments. Expenditure on political management and central administration, foreign affairs and defense show no clear trends. Financial management has undergone eventful development. It is characterized by the long period of declining interest rates, which have recently risen again significantly, and by various special funds. The special funds played a particularly important role in the years following reunification, but also in recent years.

Personnel expenditure has developed unremarkably; its share of total federal expenditure has recently even fallen to 9.1 percent. A negative trend can be seen in investments over the years, which recently accounted for an eighth of federal expenditure. The focus of policy is on allocations and grants for investments. Direct real investment in public capital stock remains at a low level.