German Cabinet Approves Record €174 Billion 2026 Budget

The German cabinet has approved a draft budget for 2026 that includes record investments of 126.7 billion euros and borrowing of 174.3 billion euros, marking a significant break from decades of fiscal conservatism. The total spending for 2026 is set at 520.5 billion euros, representing a 10% increase over 2025 and a 55% rise compared to 2024, aimed at revitalizing the economy, modernizing infrastructure, and boosting defense spending. This budget is supported by a 500 billion euro infrastructure fund and an exemption from debt rules specifically for defense spending, allowing borrowing to more than triple compared to 2024 levels. Defense spending is planned to increase substantially, with borrowing allowed up to 380 billion euros for defense from 2025 to 2029. The draft budget is part of a medium-term financial framework extending to 2029, with parliamentary discussions scheduled to begin in late September and final approval expected by the end of the year. Germany's strategy reflects efforts to overcome its recent economic stagnation by investing heavily in infrastructure and military capabilities.