Germany’s budget committee backed a record €560.92 billion federal spending plan for 2027, including €210.4 billion in new borrowing.
How the borrowing adds up
The committee approved the plan early on November 13 after an overnight session. The €210.4 billion borrowing total includes €122.97 billion from the core budget and loans through special funds for infrastructure and defence. It is the second-highest annual total since the Second World War, just below the €215.4 billion borrowed in 2021 during the pandemic. Core-budget spending is 6.9% higher than in 2026, including €61.85 billion for investment and €109.75 billion for the Defence Ministry.
Why spending is rising
Germany needs to repair and modernise infrastructure after years of underinvestment. Russia’s war against Ukraine has increased calls to rebuild the military, while an ageing population and expanded social benefits add to spending demands. The Finance Ministry says the budget will support growth, jobs, infrastructure and security. The Council of Economic Experts says crisis spending, past increases in social benefits and demographic change have added pressure to public finances.
Debt rules and political trade-offs
The plan tests, but does not abolish, Germany’s constitutional debt brake. Before its 2025 reform, the rule limited federal structural borrowing to 0.35% of GDP and required states to balance their budgets. The changes exempted defence and security spending above 1% of GDP from the federal limit and created a €500 billion infrastructure fund for projects over 12 years. In the 2027 plan, €84.55 billion in core-budget borrowing is excluded from the debt-brake calculation; the €38.43 billion that counts against the rule is at its permitted ceiling.
The budget also reflects a coalition compromise. The CDU/CSU bloc resisted new taxes and sought a broad electricity-tax cut, while its Social Democrat partners pushed to protect social support. The coalition delayed a sugary-drinks tax until 2028 and softened planned cuts to some benefits. The electricity-tax cut remains unfunded: it would cost about €5.4 billion, and the draft does not include the money.
What parliament and forecasts show
The Council of Economic Experts expects 1% economic growth in 2027, with government spending among the supports, but warns that revenues will not cover planned spending over the longer term. In one conditional scenario, continued debt-financing of defence pushes the debt ratio close to 100% of GDP by 2040. European Commission modelling suggests that infrastructure borrowing could raise Germany’s GDP above baseline over time if it funds additional, productive projects. That outcome is not guaranteed and depends on what gets built and whether the borrowing adds to investment.
The full Bundestag is scheduled to debate the plan from November 24 to 27, with a final vote planned for November 27. Parliament can still amend it. Coalition leaders are expected to revisit the electricity-tax proposal, but any addition would need a funding source. Taxpayers and younger generations face future debt and interest costs, while communities, businesses and the armed forces could benefit if investments improve transport, services and security.