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Germany’s next federal budget, which allocates €11.6 billion for Ukraine, предусматривает increasing government borrowing in 2027 to more than €203 billion, marking a much larger increase than previously projected.
According to a draft budget reviewed by Reuters, cited by UATV English, planned borrowing has risen from the €196.5 billion forecast in April and is far above the €50.5 billion borrowed in 2024 under the previous government—before Germany abandoned decades of fiscal conservatism last year in an effort to revive its economy.
The draft budget is based on the assumption that the conflict in the Middle East will ease over the summer. At the same time, it warns that if disruptions to the Strait of Hormuz or oil production facilities continue for longer, the consequences for the German economy could be far-reaching.
The 2027 draft budget, which forms part of Germany’s medium-term financial plan through 2030, envisages total spending of €555.4 billion, up from the €543.3 billion approved in April.
Total investment is expected to reach €117.5 billion, nearly €40 billion more than originally planned. The increase follows the approval of a €500 billion infrastructure fund and changes to Germany’s fiscal rules allowing defense spending to be excluded from debt limits.
Germany’s special infrastructure and climate fund will focus primarily on transport, digitalization, and hospital infrastructure, highlighting the sectors Berlin considers most in need of modernization after years of underinvestment.
Core defense spending in the federal budget is expected to increase to €109 billion in 2027, compared with €82 billion in 2026. Including €11.6 billion allocated for Ukraine and €9.4 billion for other security-related expenditures, Germany’s total defense spending will rise to €130.1 billion.
The Cabinet is expected to approve the initial draft on Monday, when the budget will be officially presented. Parliamentary budget discussions will begin after the summer recess in September, with final approval expected by the end of the year.
As previously reported, according to Reuters, Germany is calling for a €400 billion reduction to the €2 trillion European Commission budget proposal for 2028–2034.
Berlin argues that even with a €400 billion reduction, the overall EU budget would still be 27% larger than the current one, increasing Germany’s annual contribution to more than €50 billion.
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