Germany’s parliament will approve the 2026 budget on Friday, marking a significant departure from years of strict financial discipline. The core budget will total 524.5 billion euros ($607.69 billion), which includes 58.3 billion euros for investments. It plans to borrow 97.9 billion euros.
This increase in investment is supported by a 500 billion euro infrastructure fund and a recent exemption from debt rules for defense spending. Germany’s law on fiscal responsibility limits borrowing, but these special funds are not counted under that limit. Including investments from these funds, total investment will rise to 126.7 billion euros, a 10% increase from 2025 and a significant rise from the previous year.
The government expects to borrow over 180 billion euros in total in 2026, which is much higher than the 50.5 billion euros borrowed in 2024. The deficit could reach about 4% of GDP by 2027, and debt may rise to approximately 68% of GDP, although this would still be the lowest among G7 nations.
Some of the new funds will support everyday spending rather than only infrastructure. The defense budget will grow significantly, increasing by over 20 billion euros to 82.7 billion euros. Additionally, aid to Ukraine will be raised from 8.5 billion euros to 11.5 billion euros. Looking ahead, the 2027 budget has an estimated funding gap of 11-12 billion euros, and around 60 billion euros is expected for 2028.
With information from Reuters