Germany to approve draft budget with more than €203bn in borrowing

Germany's cabinet will approve the first draft of the 2027 budget ​on Monday, with total borrowing of €203.6 billion ($232.8 billion), ‌finance ministry sources said on Saturday, confirming a Reuters report from Friday.

Borrowing is up from the €196.5 billion signaled in April ​and far above the €50.5 billion in 2024 ​under the previous government, reflecting higher investment ⁠and defence spending.

New borrowing includes €118.7 billion ​in the core budget, €54.9 billion via the infrastructure fund ​and €30 billion from a special defence fund.

Core defence spending will rise to €109.0 billion in 2027 from €82.2 billion in 2026. ​Including support for Ukraine and other security ​spending, the total reaches €130.1 billion. The finance ministry expects defence ‌spending ⁠to rise from 2.8% of GDP in 2026 to 3.5% from 2029.

Germany has earmarked €11.6 billion for Ukraine in 2027 and €8.5 billion annually from 2028 ​to 2030. "What stands ​behind this ⁠is that we will do whatever is necessary to support Ukraine," a ​finance ministry source said.

Total investment will ​rise ⁠to €117.5 billion in 2027 from €78.9 billion in 2025, helped by a €500 billion infrastructure fund and looser borrowing ⁠rules ​for defence.

Total spending in the ​2027 draft budget will increase 5.9% from 2026 to €555.4 billion.

-Reuters