German government approves key targets for 2027 budget
By Maria Martinez
Key Highlights of the 2027 German Budget
Government Borrowing and Spending Plans
BERLIN, April 29 (Reuters) - The German government approved on Wednesday the key targets for its 2027 budget, which include total borrowing of 196.5 billion euros ($229 billion) as it aims to scale up spending on crumbling infrastructure and on defence.
This compares with 50.5 billion euros in 2024 under the previous government, before Germany threw off decades of fiscal conservatism last year in an effort to revive its moribund economy. This year's budget sees 180 billion euros in new debt.
Medium-Term Financial Framework
The 2027 draft budget, part of a medium-term financial framework extending to 2029, allocates total spending of 543.3 billion euros, 3.6% more than in the previous year.
Defence Spending Commitments
Increase in Core Defence Budget
The budget features a strong commitment to defence spending, which is set to climb to 105.8 billion euros in 2027 from 82.7 billion euros in 2026 in the core budget.
Special Funds and Total Defence Expenditure
Including the special fund for defence and funds for Ukraine, total defence spending is planned to reach 144.9 billion euros in 2027.
Defence Spending as Percentage of GDP
This, together with other government defence expenditure, results in total spending equivalent to 3.1% of gross domestic product in 2027, in line with commitments to NATO. This is expected to hit 3.7% of GDP by 2030.
NATO Commitments and Future Targets
NATO leaders agreed at a summit last year to spend 5% of GDP on defence and related investments by 2035.
Budget Approval Process
Following the agreement on the key points on Wednesday and cabinet approval of the first draft in July, budget discussions will commence in parliament in September, with final approval anticipated by year-end.
(Reporting by Maria Martinez and Holger Hansen; editing by Matthias Williams and Gareth Jones)
