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Germany’s 2027 draft budget foresees borrowing of more than €203 billion

Germany’s 2027 draft budget foresees borrowing of more than €203 billion

Cabinet is set to approve the first 2027 budget draft on Monday, with higher borrowing, investment and defence spending than previously signaled under Germany’s medium-term fiscal plans.

Fact Check
Two Reuters reports — a July 3 exclusive based on the actual draft document and a July 4 follow-up citing sources — both confirm the 2027 draft budget foresees more than €203 billion in borrowing (specifically €203.6 billion). Both confirm cabinet approval on Monday and higher borrowing, investment and defence spending than previously signaled (up from €196.5 billion in April). Global Banking and Finance corroborates independently. The only nuance is that at the time of these reports approval was expected but not yet finalized, but the borrowing figure and its characterization are well documented.
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Summary

Germany’s cabinet is set to approve the first draft of the 2027 budget on Monday with total borrowing of €203.6 billion, confirming a Reuters report from Friday. The figure is above the €196.5 billion signaled in April and far higher than the €50.5 billion borrowed in 2024 under the previous government, reflecting increased investment and defence spending. New borrowing includes €118.7 billion in the core budget, €54.9 billion through the infrastructure fund and €30 billion from a special defence fund. Total spending in the 2027 draft budget is projected to rise 5.9% from 2026 to €555.4 billion, while total investment is set to increase to €117.5 billion in 2027 from €78.9 billion in 2025, supported by a €500 billion infrastructure fund and looser borrowing rules for defence. Core defence spending is due to rise to €109.0 billion in 2027 from €82.2 billion in 2026, and total defence and security spending, including support for Ukraine, is set to reach €130.1 billion. Germany has earmarked €11.6 billion for Ukraine in 2027 and €8.5 billion annually from 2028 to 2030, while the finance ministry expects defence spending to rise from 2.8% of GDP in 2026 to 3.5% from 2029.

Terms & Concepts
  • infrastructure fund: A dedicated public financing vehicle used to channel borrowing into long-term projects such as transport, energy or other capital investment.
  • special defence fund: A separate government financing pool set aside for military spending outside the core budget.
  • medium-term fiscal plans: Multi-year budget projections that map out expected government spending, investment and borrowing over several years.