Inhalt
- What is a spending review?
- Why are spending reviews important?
- What does performance budgeting mean?
- What role do spending reviews play in performance budgeting?
- What is the subject of the current spending review?
- Who chooses the subject of each spending review?
- How are spending reviews carried out?
- How can I find out what measures, funding programmes, statutory benefits and horizontal tasks have undergone a spending review?
- What do the OECD and the EU think of Germany’s spending reviews?
What is a spending review?
A spending review is a subject-specific budget analysis that complements the government’s internal budget preparation process. The aim is to address the following questions:
- What are the objectives and desired outcomes of a government measure?
- To what extent is the measure helping to achieve these objectives?
- Are they being achieved in a cost-effective manner?
Spending reviews make recommendations and support performance budgeting – in other words, efforts to make Germany’s federal budget more target- and outcome-driven.
Why are spending reviews important?
The success of policies is often measured according to the funds allocated in the budget and the money actually spent. However, the German parliament and the general public are increasingly interested in the actual impact of government spending, not least given the limited resources available.
The German Ministry of Finance introduced annual spending reviews in order to improve performance budgeting. Since 2015, they have been an integral part of the government’s internal procedure for preparing the federal budget. Their aim is to ensure that public funds are used effectively and efficiently. This can create fiscal space for new measures and improve government services.
What does performance budgeting mean?
Performance budgeting is an approach in which the focus of budget management is on the desired objectives and outcomes of government measures on both the revenue and expenditure side. In other words, the government’s revenues and expenditures are reviewed to determine whether the objectives are being met and what impact the measures are having. The success and impact of these measures is measured not according to how much is spent for a particular purpose, but according to how much is accomplished with the money spent.
What role do spending reviews play in performance budgeting?
Spending reviews are cross-departmental analyses of government measures on both the expenditure and revenue side, including funding programmes, statutory benefits and horizontal tasks performed by the public administration. They address the following questions:
- What are the objectives of the revenues or expenditures?
- To what extent are the government measures helping to achieve these objectives (effectiveness)?
- Are they doing so in a cost-effective manner (efficiency)?
Spending reviews can help improve government services and create fiscal space for new government measures. They produce recommendations for action based on empirical evidence, i.e. systematically collected and verifiable observations and data. This allows budget funds to be used more efficiently. Spending reviews can also identify areas of the federal budget where there is not enough data available for performance budgeting. Conversely, budget areas where good data is available can be examined more closely during spending reviews. Moreover, spending reviews are used to assess the efficiency and effectiveness of government procedures with a view to simplifying them.
What is the subject of the current spending review?
The German government’s 14th spending review focuses on the topic of “Cross-sectoral service functions”, as decided by the federal cabinet on 6 July 2026. The spending review will develop specific recommendations for the modernisation and digitalisation of the federal administration, with a focus on internal service functions. The following ministries are working on the spending review: the Federal Ministry of Finance, the Federal Ministry for Digital Transformation and Government Modernisation, the Federal Ministry of the Interior, the Federal Ministry of Research, Technology and Space and the Federal Ministry for the Environment, Climate Action, Nature Conservation and Nuclear Safety.
The page “Spending reviews – a timeline” gives an overview of past spending reviews.
Who chooses the subject of each spending review?
The federal cabinet decides on the subject of each spending review. Possible subjects are proposed by the unit responsible for spending reviews at the German Finance Ministry, in consultation with specialist divisions within the Finance Ministry as well as other German ministries.
How are spending reviews carried out?
As a rule, each review cycle lasts about a year. At the start of each cycle, the federal cabinet chooses the subject of the spending review and decides which ministries will be involved.
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Roughly halfway through the review cycle, the working group produces an internal interim report, which is discussed and then adopted by the steering committee. If necessary, the steering committee defines the working group’s mandate in more detail at this point.
The working group submits its final report to the steering committee at the end of the review cycle. The steering committee then discusses the findings and recommendations and makes decisions by mutual agreement.
How can I find out what measures, funding programmes, statutory benefits and horizontal tasks have undergone a spending review?
After each spending review is completed, the Finance Ministry publishes the final report. These reports and other documents relating to spending reviews are published on the Finance Ministry’s publications page.
What do the OECD and the EU think of Germany’s spending reviews?
Germany’s implementation of spending reviews for the federal budget is seen as exemplary in many areas. This was the outcome of a study conducted by the Organisation for Economic Co-operation and Development (OECD) as part of the 2024 Technical Support Instrument, which was financed by the European Commission. Among other things, this positive assessment was based on the German Finance Ministry’s active leadership. The OECD and EU also commended the close links between the review cycle and the budget cycle and the fact that the process is continuously fine-tuned.
The OECD and EU issued some recommendations to the German Finance Ministry to further strengthen Germany’s spending reviews. These include:
- The efficiency of spending should play an even greater role.
- Cooperation with the line ministries should be strengthened.
- Spending reviews should be aligned more closely with performance budgeting efforts.