German lawmakers will vote later this year on a new budget that sharply raises public spending, with the plan calling for new debts to pay for record investments in defense and infrastructure projects.
The German government signed off on the country’s draft budget for 2025 Tuesday, paving the way for a massive hike in government spending.
The expected budget hike was made possible by a law passed in March, easing Germany’s so-called debt brake to allow spending on defense and infrastructure.
What do we know about Germany’s latest budget?
Under Finance Minister Lars Klingbeil’s plans, the German government would take on significant new debt to repair the country’s aging infrastructure, support a stimulus package for the weakening economy, and fund record levels of military investment.
It envisages a defense budget that would more than double by 2029, rising to €152.8 billion (roughly $177 billion).
This means defense spending is due to reach 3.5%, amid Germany’s growing security fears due to Russia’s 2022 full-scale invasion of Ukraine. US President Donald Trump is also pressuring Europe to up its military spending.
Net borrowing will also significantly increase, as per the draft budget. It is due to jump to €81.8 billion in 2025, up from €33.3 billion last year. Borrowing will continue to rise in the next four years; to €89.3 billion in 2026, €87.5 billion in 2027, €115.7 billion in 2028 and €126.1 billion in 2029.
The German government has been operating under a provisional budget since the start of the year.
Why is the 2025 budget only being decided now?
This year’s budget was delayed because of national elections in February, precipitated by the collapse of former Chancellor Olaf Scholz’s center-left-led government.
Scholz and his left-leaning SPD had split with the fiscally cautious Free Democrats over budget spending.
In March, the previous German parliament voted in favor of a major fiscal package that includes changes to debt policies to enable greater spending on defense, plus a €500 billion ($580 billion) infrastructure fund.
The 2025 budget was sent to the Bundestag, Germany’s lower house of parliament after the Cabinet approved it.
The idea is to give lawmakers time to debate the bill before the summer recess before final approval in September.
A 2026 budget is due to be agreed in full by the Cabinet in late July before a vote in the Bundestag by the end of the year.
Edited by: Darko Janjevic
DW News
