EUROPEAN FISCAL: German Taxes Run E14bln Ahead Of Norm, New Estimates Thursday

German cash tax revenue (excl. municipality taxes) through September stands at 74.4% of planned 2025 revenue according to finance ministry data published yesterday. This compares favourably to a historical average of 72.8% of realized full year revenues raised through September. The difference of around 1.6 percentage points amounts to around E14.3bln when put in nominal terms of the E893.31bln full year 2025 tax estimate from the spring projections, which Finance Minster Klingbeil is scheduled to update Thursday.

• For these tax estimates, Handelsblatt sees an overall upward correction in the order of E50-100bln through the next five years as plausible - albeit something they view as negligible compared to total projected revenues of above E5000bln over that horizon.
• Looking at federal-only data, the German fiscal deficit through September amounts to E50.2bln in September - roughly around the middle of deficits ran through September in recent years (see lower chart). The data puts the current magnitude of fiscal easing into context, especially against years such as 2021 in which a wide set of Covid fiscal countermeasures were implemented.
• The government published updated fiscal deficit projections through 2028 last week. However, headline figures published are already outdated as they were based on spring GDP forecasts. Government commentary implied that based on a rough upside of E18bln / E34bln for 2025 / 26 general government revenues, when extrapolating historical correlations to the autumn GDP forecast update, the German general fiscal deficit would amount to 4.5% of GDP in 2026 and 3.5% in 2027 (vs official estimates of 4.75% 2026 / 4.25% 2027). Focus during Thursday's update should be on a comparison of the new projections vs the mentioned rough upside sketched by the government.
• The tax projection press conference is scheduled for Thursday 10:00 BST / 11:00 local time.