Federal Employment Agency expects deficit of over eight billion euros in 2026

The agency attributes the development to the weak economic cycle and a rising number of unemployed people. At the end of April, the financial gap in the BA budget was 4.1 billion euros, according to the letter, due to the unfavorable labor market situation and increased expenses. Originally, a deficit of only 3.3 billion euros had been expected.

According to the report, BA expenses for unemployment benefits rose by 17 percent to 10.2 billion euros in the first four months of the year compared to the same period last year. Additional expenses in the area of unemployment benefits of 4.3 billion euros could be possible this year. According to the internal letter, expenses of up to 1.8 billion euros in another area could be added for 2026.

Unemployment Benefit Expenses Rise Significantly

The BA refers to the government's latest economic key figures, which expect unemployment to rise to around 2.98 million this year. In the current projection, 2.83 million have been used as the basis for this year. In all years until 2030, unemployment is projected to remain below three million on an annual average.

In May, the number of unemployed people decreased by 58,000 to 2.95 million compared to the previous month. In its autumn forecast, the Federal Agency had expected unemployment to fall to 2.74 million by 2030.

Due to the expected unemployment, "a positive budget balance is not feasible," the BA writes in the letter to the Bundestag's budget committee. However, the projection is still subject to "high uncertainty."

Political Context

The Federal Agency also points out that the authority is fulfilling its actual function in the current situation. "So it is doing exactly what it was set up for," said a Member of Parliament. "The real problem is a weak labor market."

Background: Tasks and Financing of the BA

The Federal Employment Agency is an independent federal authority based in Nuremberg. Among other things, it manages insurance benefits for unemployment and pays unemployment benefits. It is financed primarily by unemployment insurance contributions paid by employees and employers. In the event of a deficit, the federal government provides liquidity assistance, which is to be repaid later.

The report was picked up on June 3, 2026, on Deutschlandfunk. The final budget deliberations in the Bundestag are still pending. How exactly the federal government will deal with the expected billions in burdens remains open.