Schleswig-Holstein’s Finance Crisis: €1B Annual Gaps Loom

State Auditor Criticizes Black-Green Budget Plans - Schleswig-Holstein’s €1.7 Billion Budget Crisis Deepens by 2032

Schleswig-Holstein's budget faces a bleak future, with financing gaps set to soar in the coming years. The current government, led by Minister President Daniel Günther of the Christian Democratic Union (CDU), is struggling to meet its own promises of an investment-driven yet austerity-focused budget. The state's finances are projected to fall short by an average of nearly €1 billion annually.

The Court of Auditors, under outgoing President Gaby Schäfer, has slammed the 2026 draft budget for lacking genuine spending cuts. Despite a recent positive tax revenue forecast for October, the deficit remains largely unaffected. The state government plans to plug the budget gap by withdrawing €300 million from the pension fund and dissolving reserves. However, it must refrain from taking out planned cyclical credit lines.

By 2032, the financing gap is expected to surge from €1 billion in 2027 to €1.7 billion. Even with planned savings, average annual funding gaps of around €400 million will remain. The government intends to use its entire new borrowing capacity of €520 million exclusively for investments, but this does not represent additional funding.

The 2026 budget foresees a financing deficit of €921 million, with the Court of Auditors calculating the shortfall at €1.3 billion. The state government, led by the CDU since at least 2017, faces criticism for its budget consolidation plan. As the Social Democratic Party (SPD) prepares for the next state election in 2027, the future of Schleswig-Holstein's finances hangs in the balance.