Germany risks losing its top AAA credit rating because of high government debt, German newspaper Handelsblatt reported. Concern over the rating is growing within the German government and among economists. A downgrade would lead to higher interest rates, reduced federal budget flexibility, and a negative impact on other eurozone countries.
A senior government official said rating agencies could doubt the AAA rating of the European Union's leading economy if debt remains high and growth fails to accelerate.
Second quarter economic performance
The warning comes despite better than expected performance in the second quarter of 2026. According to the Federal Statistical Bureau of Germany, gross domestic product grew by 0.2 percent during the period. The Ifo Institute for Economic Research had previously forecasted that the economy would stagnate.
Increased exports drove the economic growth in the second quarter despite geopolitical instability. In contrast, consumer spending developed sluggishly and business investments shrank.
