The German government approves the 2026 budget with a deficit of 100 Billion Euros
The German government has endorsed a €524 billion federal budget for 2026, marking one of its largest spending frameworks in recent years and confirming a significant budget deficit driven by renewed heavy borrowing.
The plan foresees around €100 billion deficit, a level reminiscent of the borrowing deployed during the Covid-19 pandemic.
This borrowing forms the core of the 2026 budget deficit, while the remaining funding is expected to come from tax revenues.
In addition, the government intends to draw more than €80 billion in loans from the Extraordinary Financing Fund, which is dedicated to infrastructure upgrades and defense modernization.
Spending priorities remain focused on major social and security commitments.
– The Ministry of Labor and Social Affairs will receive over €140 billion, making it the largest single allocation. Most of this amount is earmarked for pensions and other long-term social obligations.
– The Ministry of Defense is set to obtain about €83 billion, representing an increase of roughly €20 billion compared with the current year.
Other budget lines include allocations for transport networks, healthcare services, education and research programs, energy initiatives, and international development.
Substantial sums are also reserved for interest payments and debt servicing, reflecting the impact of higher financing costs.
According to the finance ministry, the 2026 plan is intended to sustain economic growth, stabilize employment, and maintain essential public services, even as Germany confronts rising borrowing costs and a slowing economy.
Officials also acknowledge that a considerable share of the budget won’t finance new investments but will instead cover recurring operating costs, particularly pension obligations and the management of existing debt.
