The key facts

  • The 2027 budget draft of €561 billion was approved by the Bundestag's budget committee; the final vote is on November 27
  • The deficit is €123 billion, total borrowing including special funds exceeds €210 billion — the second-highest figure in German history
  • The defense budget will rise to almost €110 billion, social spending will exceed €200 billion

Committee approved the draft after overnight negotiations

The Bundestag's budget committee concluded its final session on Friday at 5:55 a.m. after nearly 16 hours of negotiations. Members of the CDU/CSU and their coalition partners from the SPD voted in favor of the 2027 budget draft; the opposition Greens, the Left, and Alternative for Germany voted against. The path is now open for the final vote in the Bundestag on November 27.

Record spending and the second-highest debt in German history

Next year the German government plans to spend around €561 billion ($620 billion) — a record figure. However, revenues will not be enough to cover the spending: the deficit will amount to €123 billion and will have to be covered through borrowing. If loans under the special funds for defense and the repair of worn-out infrastructure, approved by the Bundestag in 2025 and designed to run over several years, are also taken into account, total borrowing will exceed €210 billion. This is the second-highest level of debt in the history of the Federal Republic of Germany: Germany borrowed more only in the pandemic year 2021 — €215.4 billion.

Opposition criticizes the 'mountain of debt'

The opposition parties sharply criticized the draft. Green Party member Sebastian Schäfer and his colleague from the Left, Dietmar Bartsch, called the borrowing a 'gigantic mountain of debt,' the budget 'untrustworthy,' and the policy 'irresponsible' toward future generations, pointing to the lack of prospects.

Where the money goes: defense, pensions, and infrastructure

The rise in debt is explained by a combination of several factors: Russia's war against Ukraine is increasing defense spending, the weak economy requires new investment, the aging population raises social spending, and the worn-out infrastructure and the energy transition must be financed. More than half of the new debt is allocated to security and defense.

The defense budget will rise to almost €110 billion

In 2027, Russia's war against Ukraine is already in its sixth year. According to the federal government's estimate at the end of June, total support for Ukraine has reached approximately €100 billion. In response to an AfD inquiry in the Bundestag, the government stated that it 'will continue to provide Ukraine with political, financial, humanitarian, civil, and military support for as long as necessary.' The defense budget in 2027 will rise to almost €110 billion — an increase of about €27 billion compared with the previous year, not counting spending from the Bundeswehr special fund.

The largest item is social spending and pensions

Nevertheless, the largest budget item remains the Ministry of Labour and Social Affairs: its volume will grow to more than €200 billion. Savings measures are planned, for example in the basic income support for job seekers, but spending on old-age pensions continues to grow. People born in the 1960s have begun retiring, while the birth rate has almost halved since the early 1970s and continues to fall: the number of pensioners is growing while the number of working-age employees is shrinking. Pension funds are no longer covered by contributions from the shrinking workforce and are subsidized by the state; pension insurance contributions, shared equally between employees and employers, will rise to almost 20% of gross wages. The Federal Employment Agency has long been unable to make ends meet either: in 2027 it is allocated subsidies of more than €8 billion from the federal budget.