Overview

• Finance Minister Lars Klingbeil has warned of a €30 billion funding gap in 2027 and demanded immediate spending cuts across the coalition government
• The draft budget leverages March’s constitutional amendment that eased Germany’s debt brake and established a €585 billion infrastructure fund
• Defence outlays are exempt from borrowing limits to meet NATO commitments, boosting military spending toward 5 percent of GDP
• The CDU–SPD coalition holds a parliamentary majority but must secure approval this fall while managing competing domestic spending priorities
• Economists caution that sustained large-scale borrowing could squeeze other public services and test Germany’s fiscal credibility in the European Union