Ageing Germans push social spending to record high, Ifo says

Combined spending related to old age and illness accounted for about 70% of total social spending in Germany last year, pushing the social budget to a new record high, according to an analysis by the Ifo institute published on Monday.

Spending related to old age and illness was responsible for more than 80% of the real increase in spending since 1992, the analysis found

The key structural cost driver behind this trend is demographic change, which is exacerbating the shift in the welfare state burden between generations

“The social budget is growing faster than GDP, which is why the weak economy is also contributing to the increase in the social budget share,” said Ifo researcher Emilie Hoeslinger

According to the analysis, social spending rose by 11.5%, or €104bn, between 2019 and 2025, adjusted for price effects

During this period, the social budget share reached a new record high, rising from 29.6% to 32%

The main cost drivers are the additional spending for the insured elderly population on illness and care, as well as higher federal pension payments.