As German cities warn of financial collapse, Chancellor Friedrich Merz is ruling out tax rises or extra funding – and instead pushing cuts to social laws that could affect millions.
Germany’s states and municipalities are sliding deeper into deficit, with many warning they are reaching breaking point.
On Monday, city administrations around the country joined in a nationwide day of action under the slogan “Municipalities at the Limit”, with some shutting their doors to highlight what they describe as a worsening financial crisis.
The message from mayors is stark: without relief, basic services are at risk.
The timing is no coincidence: On Thursday, Germany’s 16 state premiers will meet Chancellor Friedrich Merz in Berlin for talks on the future of local government finances.
At the heart of the discussions is the so‑called Konnexitätsprinzip – the long‑standing expectation in Germany that the federal government should be responsible for the costs imposed on states and municipalities through federal laws.
Merz draws a hard line ahead of summit
On Sunday, Merz sought to set the tone ahead of the meeting during a public appearance at a ‘citizens’ dialogue’. His message was uncompromising: The federal government will neither raise taxes nor provide additional funds to struggling cities and regions.
“We cannot pay for everything indefinitely,” he said, adding that costs in some areas are rising at double‑digit rates each year.
Rather than offering to provide financial support, Merz instead wants to change federal laws so that states are not obliged to provide certain social services.
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An agreement to amend these laws, he said, should ideally be reached before or during Thursday’s summit, with the goal of ensuring that municipalities “will have to spend less money”.
In his remarks, Merz mentioned three key areas of social policy where he believed savings could be made if states were released from their legal obligations.
We look at the consequences this could have for families, children and people with disabilities in Germany.
Advance Child Support Act (Unterhaltsvorschussgesetz)
This system provides financial support to children of single parents when the other parent fails to pay child support, with the state stepping in and later seeking reimbursement.
At present, more than 850,000 children rely on these payments.
The proposals under discussion would significantly restrict access: eligibility would be tightened, payments would be limited to a maximum of six years, and support would generally end once a child reached the age of 12.
The Paritätische Gesamtverband, one of Germany’s largest umbrella organisations representing social welfare providers, warns that these changes would mean that many single parents – particularly those already vulnerable to poverty – could lose support earlier or fail to qualify at all.
In practice, this would roll back a 2017 reform that had expanded access to child support for families under financial pressure.
Child and Youth Welfare Act (Jugendhilfegesetz)
Germany’s youth welfare system supports millions of children, young people and families, covering everything from daycare and youth centres to counselling services and intensive family support in crisis situations.
Proposed reforms would reportedly shift this system away from individually tailored assistance toward more generalised services, such as those offered in daycare centres and social support
centres. Under the proposed reforms personalised support would only be provided in exceptional cases.
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At the same time, support for young people leaving care – currently available up to the age of 21, or in some cases 27 – would be significantly restricted, and services for unaccompanied minor refugees would be scaled back.
For families in difficult situations, this could mean losing access to targeted, case‑by‑case help and having to rely instead on standardised services that may not meet their needs.
Young adults transitioning out of care could also face a much more difficult path to independence, and heightened risks of homelessness, unemployment and long-term social problems.
Integration Assistance (Eingliederungshilfe)
Integration assistance is designed to enable people with disabilities to participate fully in society, including support in schools, at work and in everyday life.
Around one million people in Germany depend on these services. The Paritätische Gesamtverband argues that current proposals would fundamentally reshape this system by removing the individual right to school assistants for disabled children, restricting people’s ability to choose how and where they receive care, and shifting support from individualised arrangements to group-based services.
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Access to devices designed to assist disabled people would also be more tightly limited. In practical terms, this could mean that children with disabilities lose one-to-one support in classrooms while adults may face reduced autonomy, including pressure to accept institutional care rather than support at home.
The organisation argues that such changes would significantly restrict independent living and could undermine Germany’s obligations under international disability rights conventions.
A broader reform plan
The proposed changes to these three laws are not isolated measures but part of a broader set of potential cost‑cutting measures.
In April, the Paritätische Gesamtverband published a list of more than 70 proposed cuts drawn from proposals being developed by a working group involving the federal government, states and municipalities.
These proposals, it warns, would significantly scale back social support “for millions of people and their families.”
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