Chancellor Merz and Finance Minister Klingbeil.Image: keystone
From a German budget perspective, the new year can come: The German parliament has approved the budget for 2026 – with debts higher than ever before during the corona pandemic.
November 28, 2025, 3:33 p.mNovember 28, 2025, 3:33 p.m
The coalition of Christian Democrats (CDU/CSU) and Social Democrats aims to put the country on a growth path and secure jobs, explained German Finance Minister Lars Klingbeil in the final debate in parliament.
“This budget once again has record investments. But it’s also important that investments flow quickly now.” The SPD leader warned that the billions would have to be used now.
In total, parliamentarians approved spending of 524.5 billion euros in Chancellor Friedrich Merz’s government. That’s 21.5 billion more than this year. In order to finance this, debts of almost 98 billion euros should be taken up in the core budget alone.
There are also loans from special funds for the Bundeswehr and infrastructure. Overall, new debt is likely to be more than 180 billion.
What the most money is for
The labor and social budget accounts for more than a third of the budget, especially because the government has to contribute more and more money to pension insurance. Slightly decreasing expenses are planned for citizens’ money.
The budget with the highest investments is that of Transport Minister Patrick Schnieder (CDU). The money flows into roads, bridges and rails.
In addition to almost 14 billion euros in the core budget, Schnieder can budget more than 21 billion euros from a debt-financed special pot for infrastructure.
Another focus is defense: spending on this will rise to around 108 billion euros – and thus to a high since the end of the Cold War. A large portion of the money flows into military equipment and ammunition, much of it financed through loans.
Ukraine will receive 11.5 billion euros for artillery, drones, armored vehicles and other equipment. According to the Defense Ministry, this is the highest amount since the Russian attack.
What is in the budget for the citizens
There is direct relief by increasing the commuter allowance in the tax return. In addition, low- and middle-income households can receive a bonus for purchasing an electric car.
A funding program for efficient homes with climate-friendly heating will be running from December 16th – the so-called EH55 funding.
However, it is doubtful whether the lower VAT rate for meals in restaurants will be passed on to customers. The coalition also sees its aid for the weakening economy as good for the citizens: economic growth secures jobs, argues the SPD in particular.
What the opposition thinks about it
The AfD, the Greens and the Left rejected the budget in their speeches – but anything else would have been a surprise. The AfD warned above all of billions in interest payments because of the high loans.
On the global political stage, Germany is now a “financial court jester,” said budget politician Kay Gottschalk.
The Greens and the Left do not consider the loans themselves to be the biggest problem, but what they are used for.
The government has lost the chance “to do something good for our country from its huge additional debt opportunities in the largest budget ever,” said Green Party housekeeper Lisa Paus.
Instead of adequately repairing the infrastructure, election gifts would be financed. Left leader Ines Schwerdtner complained that this budget does not reflect people’s priorities.
“Real responsibility means investing this money in what really supports a country: affordable housing, good schools, functioning daycare centers, care and strong communities.”
Which concerns the finance minister much more
Klingbeil described the 2026 budget as a “warm-up”. Because his thoughts have been circling around the 2027 and 2028 budgets for months. There are huge holes in the planning.
According to the latest tax estimate, 22 to 23 billion still need to be scraped together or saved for 2027 alone. The gap should shrink a little because you have money left over this year and a reserve for the next.
Nevertheless, a savings package is needed: tax increases and the elimination of subsidies and support programs are being discussed. (sda/dpa)