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Germany Greenlights 2026 Budget Proposal with Record Investments
(MENAFN) Germany’s cabinet gave the green light on Wednesday to the federal budget proposal for 2026, marking a second consecutive year of record-breaking investment as the government focuses on modernizing infrastructure and enhancing national security.
Finance Minister Lars Klingbeil introduced the draft, which outlines planned spending of 520.5 billion euros (approximately 598.6 billion U.S. dollars) for the upcoming year—a 3.5 percent increase compared to the 2025 budget, which still awaits parliamentary approval.
Since taking office in May, the government has prioritized structural reforms and public investment to boost Germany’s economic recovery. The budget draft forecasts total investments climbing to 126.7 billion euros (about 145.7 billion U.S. dollars) next year, surpassing the previous record set in 2025. The proposal highlights a significant rise in defense spending, alongside increased allocations for transportation and housing projects.
"Our primary goal is to safeguard jobs and ensure new economic strength," Klingbeil said. "We are investing today to make Germany more modern, fair, and secure tomorrow."
However, a substantial portion of the investment will be funded through off-budget special funds, a strategy criticized for circumventing Germany’s constitutional debt brake and masking the true extent of borrowing.
Despite its ambitious scale, the government faces growing worries over the budget’s long-term fiscal health. The financial plan anticipates a funding shortfall of 172 billion euros (about 197.8 billion U.S. dollars) through 2029, about 30 billion euros (34.5 billion USD) higher than Klingbeil’s estimate in June. This expanding deficit is largely attributed to proposed corporate tax reductions and compensatory payments to state and local authorities.
Following cabinet approval, the draft budget will now advance to the Bundestag for parliamentary discussion and final ratification.
Finance Minister Lars Klingbeil introduced the draft, which outlines planned spending of 520.5 billion euros (approximately 598.6 billion U.S. dollars) for the upcoming year—a 3.5 percent increase compared to the 2025 budget, which still awaits parliamentary approval.
Since taking office in May, the government has prioritized structural reforms and public investment to boost Germany’s economic recovery. The budget draft forecasts total investments climbing to 126.7 billion euros (about 145.7 billion U.S. dollars) next year, surpassing the previous record set in 2025. The proposal highlights a significant rise in defense spending, alongside increased allocations for transportation and housing projects.
"Our primary goal is to safeguard jobs and ensure new economic strength," Klingbeil said. "We are investing today to make Germany more modern, fair, and secure tomorrow."
However, a substantial portion of the investment will be funded through off-budget special funds, a strategy criticized for circumventing Germany’s constitutional debt brake and masking the true extent of borrowing.
Despite its ambitious scale, the government faces growing worries over the budget’s long-term fiscal health. The financial plan anticipates a funding shortfall of 172 billion euros (about 197.8 billion U.S. dollars) through 2029, about 30 billion euros (34.5 billion USD) higher than Klingbeil’s estimate in June. This expanding deficit is largely attributed to proposed corporate tax reductions and compensatory payments to state and local authorities.
Following cabinet approval, the draft budget will now advance to the Bundestag for parliamentary discussion and final ratification.
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