German Cabinet passes 2025 draft budget and framework for 2026
Germany's total defence spending will go up from €95 billion in the draft budget for 2025 to €162 billion in the budget framework for 2029. PHOTO: REUTERS
BERLIN - Germany's Cabinet on June 24 approved a draft budget for 2025 and a budget framework for 2026 with record investments in both years to stimulate growth after Europe's biggest economy failed to grow for two consecutive years.
The drafts include investments of €115.7 billion (S$171.9 billion) in 2025 and €123.6 billion in 2026, up from €74.5 billion in 2024.
'By 2029, we will increase the federal government's annual investments to almost €120 billion per year,' Finance Minister Lars Klingbeil said on June 24 .
The draft budget for 2025 also includes the mid-term financial plan until 2029, which shows that Germany will raise defence spending to 3.5 per cent of economic output by 2029, funded through a nearly €400 billion borrowing programme.
Germany's total defence spending will go up from €95 billion in the draft budget for 2025 to €162 billion in the budget framework for 2029.
This investment surge will be possible thanks to a special €500 billion infrastructure fund and an exemption from debt rules for defence spending approved in March 2025 .
'With this budget and the €500 billion investment fund, we are setting in motion what we need now to ensure new economic strength, make our country modern and future-proof and to enable safe living in Germany in the future as well,' Mr Klingbeil said.
From 2025 to 2029, Germany will borrow a total of €500 billion for its budgets, with additional €270 billion borrowed through its infrastructure fund, according to the draft budget and mid-term financial plan.
Adding the funds to be borrowed with the defence fund created by the previous government when Russia invaded Ukraine in 2022, total borrowing in the five-year period would rise to €847 billion.
After former chancellor Olaf Scholz's coalition collapsed in November 2024 , the last government ran out of time to pass the 2025 budget. Germany has been operating on a provisional budget since the start of the year.
The budget committee will finalise details of the 2025 budget in September 2025 , when it should also be approved by lawmakers.
The first draft of the 2026 budget should be approved on July 30, 2025 . It is to be discussed in parliament in September 2025 , then approved in the Lower House of Parliament in November 2025 and the Upper House in December 2025 , following the usual schedule. REUTERS
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