Leipzig in the financial crisis: City fears debt explosion!

Leipzig in the financial crisis: City fears debt explosion!

In Leipzig, in the middle of the holiday season, there is a tense financial situation in the town hall. Finance Mayor Torsten Bonew (CDU) describes the situation as “extremely tense” and expresses Mayor Burkhard Jung’s (SPD) great concern about the city’s financial situation. At the end of June, internal austerity measures were intensified, leading to cuts in various areas. Among other things, project funds for the cultural scene were frozen, financing for daycare centers was renegotiated and cuts in school social work were sought. Jung calls the current situation the “most serious financial crisis since the Second World War.”

At the beginning of June, a “crisis discussion” took place between the city and the state management, which made the pressure to save official. The city is facing several financial challenges: falling trade tax revenues, increasing personnel and social expenses and a significant 60 million euro loan for the St. Georg Clinic. Expenses are outpacing income and it is forecast that short-term loans may rise by €320 million by July. The city's budget is almost three billion euros annually.

Growing debt and austerity

The debt level in Leipzig will rise from 0.5 billion euros in 2023 to almost 2.2 billion euros in 2029. The city also fears a financial gap of 190 million euros by 2028. To counteract this development, an austerity program was launched that is intended to save 100 million euros, including by cutting hundreds of jobs in the town hall, but without any layoffs. The budget is not expected to be approved until after the summer break in September at the earliest; until then, a provisional budget will apply that limits funding and investments. Specific information about the necessary cuts and postponed investments is currently unclear.

Leipzig's current financial report points to a worrying development. According to information from l-iz, the debt increased from 464.8 million euros on December 31, 2022 to 824.3 million euros on December 31, 2023. This means a drastic per capita debt from 754 euros to 1,336 euros. During the Corona pandemic, there were fears that debt would rise to over 1 billion euros, but this did not happen. Numerous federal and state support services have mitigated pandemic-related additional expenses and reduced income.

Investments and future challenges

In 2022, Leipzig recorded a peak in tax revenue of 751 million euros. In 2023, there was a positive picture of tax revenue, which was forecast at 859 million euros net and, at 941 million euros, already exceeded expectations. A likely plus of around 18 million euros is expected in the 2023 financial year, although a minus of 55 million euros was planned. Nevertheless, the situation for the city remains tense as the investment backlog continues to grow and financial leeway is limited.

In summary, the financial prospects for Leipzig are extremely challenging. The city faces the need to increase austerity pressures while maintaining essential services and infrastructure to meet the needs of its citizens. New discussions about the budget are to be expected as pressure increases from all sides. The lack of funds could have far-reaching consequences for local development and the quality of life of residents.

For more information on this topic, please visit lvz.de and l-iz.de.