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The Bundestag held its first reading of the 2027 federal budget on Tuesday, triggering a sharp confrontation over the fiscal policy course of the black-red coalition. Finance Minister Lars Klingbeil presented a budget with expenditures of €555.4 billion (approximately $644.3 billion) and total new borrowing of €203.7 billion (approximately $236.3 billion). He defended the approach as catching up on missed investments and pointed to upwardly revised economic forecasts as well as a startup boom. The opposition responded with fierce criticism: the AfD spoke of a “debt government” and accused Klingbeil of unconstitutional accounting tricks, including the deferral of COVID-19 debt repayments and the reclassification of infrastructure funds for defense purposes. The Greens and the Left Party also criticized accounting gimmicks and underfunding of the core budget. The deliberations continue through Friday.
Key Elements
The first reading of the 2027 federal budget in the Bundestag on Tuesday triggered a sharp confrontation over the fiscal policy course of the black-red coalition. Federal Finance Minister Lars Klingbeil presented lawmakers with a budget that increases spending by roughly six percent to €555.4 billion (approximately $644.3 billion) and projects net borrowing of €118.7 billion (approximately $137.7 billion). When adding debt from the special funds for infrastructure and climate neutrality, total new borrowing amounts to €203.7 billion (approximately $236.3 billion).
The SPD politician defended this course as a necessary correction of misguided austerity policies. “The ‘black zero’ became a fetish when interest rates were near zero and we could have invested well. That was a mistake, and this government is now making up for it,” Klingbeil said on the floor. Germany is now getting its infrastructure back in shape, which requires investment. The reforms initiated by the coalition are already showing results: “Economic institutes are currently revising their forecasts upward across the board.”
Indeed, leading research institutes have significantly raised their projections recently. The Leibniz Institute for Economic Research Halle expects GDP growth of 1.4 percent for 2026, while the Kiel Institute for the World Economy has raised its forecast from 0.8 to 1.3 percent. The federal government itself remains considerably more cautious with its estimate of 0.5 percent. The finance minister also pointed to a “startup boom”: more than 3,000 startups were founded in the first half of 2026, an increase of 52 percent compared to the second half of 2025.
The Largest Budgets: Pensions, Defense, Transportation
| Ministry | 2027 Budget | Change |
|---|---|---|
| Labor and Social Affairs | €201.46 billion | Largest single item, predominantly pensions |
| Defense | €109.75 billion | +32.7% (with special fund: nearly €140 billion) |
| Transportation | €26.43 billion | Third-largest budget |
Note: Figures according to the cabinet decision, as cited in the budget debate.
To finance a planned relief package of €10 billion (approximately $11.6 billion) for low- and middle-income earners and families, the coalition is banking on a “super-rich tax.” People with particularly high incomes are to be asked to contribute more in the future. Klingbeil ruled out a systematic dismantling of the welfare state: “We need a functioning welfare state so that Germany can be a strong country.”
AfD Takes Aim at the “Debt Government”
As the largest opposition faction, the AfD had the first right of reply after the minister. Its budget policy spokesman Michael Espendiller used the opportunity for a fundamental reckoning. He began with a personal experience at the gas station: “On Saturday, like millions of other Germans, I had the dubious pleasure of having to fill up: €2.42 per liter of diesel.” On every liter, the state earns more than one euro through energy tax, CO₂ levy, and value-added tax — which in Germany is also levied on the taxes themselves.
The opposition politician then ran through the budget draft. Federal revenues stood at €437 billion (approximately $506.9 billion), with tax revenues €7.5 billion (approximately $8.7 billion) higher than the previous year. “So you have more money than ever before, not less,” he countered Klingbeil. Planned expenditures in the core budget and special funds amounted to €669 billion (approximately $776 billion). “This federal government fills the gap with new debt: €204 billion (approximately $236.6 billion).” Nearly one in three euros spent is borrowed. Under the old debt brake, only €63.3 billion (approximately $73.4 billion) in borrowing would have been permissible.
Espendiller was particularly scathing about the interest burden. The draft lists €41 billion (approximately $47.6 billion) for interest alone — “more than the ministries for health, education, family, economy, justice, digital affairs, and environment have available combined.” By 2030, interest expenditures would rise to more than €80 billion (approximately $92.8 billion) according to the financial plan. “That is not a wild forecast of mine; that is the official planning of this debt government.”
Allegations of Accounting Tricks
The AfD politician accused the government of balancing the budget only through “unconstitutional accounting tricks”: deferring, reclassifying, and reshuffling. For example, repayment of COVID-19 debt would not begin until 2033. Four billion euros for bridges, roads, and rail lines would be shifted into the defense budget because they are classified as “defense-relevant” and can therefore be financed through unlimited borrowing. Additionally, the federal government has provided roughly €30 billion (approximately $34.8 billion) in loans to health insurers, long-term care funds, and the Federal Employment Agency since 2020, which do not count against the debt brake. “Not even one billion euros has been repaid,” he emphasized. “You are now indebting the contributors along with your debt frenzy.”
The accusation of accounting tricks did not come only from the right. Green politician Sebastian Schäfer also spoke of “accounting gimmicks” during the debate. He criticized that investments would fall steeply in the coming years and were being artificially inflated. “Your budget is cutting away our future.” Without the massively distorted calculation, the federal government would not meet the constitutional requirement. “You are simply investing too little in the core budget.” That would cost the German economy more than two percent in growth by 2030.
Green parliamentary group leader Katharina Dröge had already criticized the finance minister in advance. Instead of investing more in climate protection, money from the Climate and Transformation Fund was being cut to plug holes in the federal budget. Specifically, €2.7 billion (approximately $3.1 billion) from the auctioning of CO₂ certificates is to be transferred to the regular budget next year. Dröge said Klingbeil was “gaming the system” in closing the budget gap.
The Left Party’s budget policy spokesman Dietmar Bartsch criticized above all the spending on “excessive rearmament” and accused the chancellor of accumulating one trillion euros in new debt during his term. Sahra Wagenknecht of the BSW described the budget as “sick” and as the “largest military budget since 1945.” She told Bild: “Citizens’ tax money is simply being burned for weapons that nobody needs, because every loan must eventually be repaid with interest and compound interest.”
The budget deliberations continue through Friday. On Wednesday, the chancellor and the parliamentary group leaders of the parties will speak, followed by deliberations on the individual ministry budgets. The draft envisions closing the original financing gap of €34 billion (approximately $39.4 billion) through budget consolidation and reforms — an approach the opposition views as a mix of accounting tricks and inflated revenue expectations.
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