Overview
- The federal government published its 2027 draft budget late August with total planned spending of €555.4 billion and a core net borrowing target of €118.7 billion, and Finance Minister Lars Klingbeil will present the plan to the Bundestag on Tuesday, 8 September 2026 for first readings and referral to the budget committee.
- Defence is the fastest‑growing item: the draft raises total defence spending to €139.6 billion for 2027, with €109.7 billion in the regular defence budget and about €29.9 billion financed from the Bundeswehr special fund set up in 2022.
- The government routes large programmatic spending and fresh borrowing through off‑budget instruments such as the Klima‑und‑Transformationsfonds (KTF), the Sondervermögen Infrastruktur und Klimaneutralität (SVIK) and the Bundeswehr fund, with SVIK expecting roughly €54.9 billion of market credit in 2027 and the Bundeswehr fund planning around €30 billion of disbursements.
- Core ministry lines show selective cuts and reclassifications: social spending remains the single largest item at about €201.5 billion while education, development cooperation and some environment and foreign policy program lines are reduced or shifted into special funds, and intelligence and security budgets such as the BND receive noticeable increases.
- The draft projects sharply higher net interest costs through 2030 that will widen from about €41.8 billion in 2027 to much larger sums later, a pattern that raises questions about long‑term fiscal space, debt transparency because of off‑budget borrowing, and the pressure this will place on future spending choices.