Finance
German parliament passes debt-heavy 2026 budget
Published by Global Banking and Finance Review
Posted on November 28, 2025
2 min readLast updated: January 20, 2026
Global Banking and Finance Review
Company
Published by Global Banking and Finance Review
Posted on November 28, 2025
2 min readLast updated: January 20, 2026
Germany's parliament passed a 2026 budget with over 180 billion euros in new debt to revive the economy, focusing on infrastructure and defence.
BERLIN (Reuters) -Germany's parliament on Friday passed the budget for 2026 with over 180 billion euros ($208 billion) in new debt, outlining how Berlin will use its financial firepower to revive the anaemic economy.
That borrowing level was only surpassed during the pandemic in 2021, with 215 billion euros and is possible thanks to a special 500-billion-euro infrastructure fund and an exemption from debt rules for defence spending approved in March.
The budget features high investment levels aimed at reviving Europe's largest economy after two years of contraction, a strong commitment to defence spending and a 3-billion-euro increase in Ukraine aid.
The core budget, with total spending of 524.5 billion euros, includes 58.3 billion euros in investments.
Including investments through special funds, which are excluded from Germany's debt brake, total investment goes up to 126.7 billion euros, marking a 10% increase over 2025 and following a 55% increase this year from 2024.
Germany's debt brake limits borrowing to 0.35% of gross domestic product.
In the same way, the core budget envisages borrowing of 97.9 billion euros in 2026, but adding borrowing through the special funds for infrastructure and defence, total new debt will be well over 180 billion euros.
It is more than three times the 50.5 billion euros borrowed in 2024 under the previous government.
($1 = 0.8654 euros)
(Reporting by Maria Martinez, editing by Miranda Murray and Thomas Seythal)
Debt sustainability refers to a country's ability to maintain its current level of debt without requiring debt relief or accumulating further debt, ensuring that it can meet its financial obligations.
Economic growth is an increase in the production of goods and services in an economy over a specific period, typically measured as the percentage increase in real GDP.
A financial crisis is a situation in which the value of financial institutions or assets drops significantly, leading to widespread economic instability, often characterized by bank failures, stock market crashes, and reduced consumer confidence.
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