By Maria Martinez <\/p>\n
BERLIN, July 6 (Reuters) – Germany’s cabinet approved the first draft of the 2027 budget on Monday, ramping up investment and defence spending to shield its sluggish economy from war-related energy shocks and years of underinvestment. <\/p>\n
The 2027 \u200cdraft budget, part of a medium-term financial framework extending to 2030, allocates total spending of \u20ac555.4 billion ($634.16 billion), with total \u200cborrowing amounting to \u20ac203.6 billion, confirming a Reuters report from Friday. <\/p>\n
“We want Germany to be a strong and crisis-resilient country,” German Finance Minister Lars Klingbeil said. “That is why the \u200bpriorities in the 2027 budget are clear: We want to put our country back on a growth path and create the jobs of the future in Germany.” <\/p>\n
From 2027 to 2030 Germany plans to borrow a total of \u20ac838.2 billion, thanks to the special fund for infrastructure approved last year and an easing of borrowing rules to allow greater defence spending. <\/p>\n
“We are investing in future viability and innovative strength, as well as in \u200csecurity and resilience,” Klingbeil said. <\/p>\n
As a result of \u2060high levels of debt, interest payments are set to almost double by 2030, from \u20ac41.9 billion in 2027 to \u20ac80.7 billion. <\/p>\n
Industry association BDI and the German Mittelstand association DMB criticised the high level of borrowing. <\/p>\n
“By 2030, nearly \u2060one in five euros of tax revenue could be tied up in interest payments,” said BDI chief executive Tanja Goenner. <\/p>\n
New borrowing in 2027 includes \u20ac118.7 billion in the core budget, \u20ac54.9 billion via the infrastructure fund and \u20ac30 billion from a special defence fund. <\/p>\n
Total investment will rise to \u20ac117.5 billion in 2027 from \u20ac78.9 \u200bbillion \u200bin 2025 under the previous government, helped by a \u20ac500 billion infrastructure fund and \u200blooser borrowing rules for defence. <\/p>\n
FOCUS ON DEFENCE <\/p>\n
Core defence spending \u200cwill rise to \u20ac109 billion in 2027 from \u20ac82.2 billion in 2026. The total reaches \u20ac130.1 billion including support for Ukraine and other security spending. <\/p>\n
“We cannot defend Germany against Putin with a balanced-budget policy,” Klingbeil said. “We must make up, in the shortest possible time, for three decades in which no investment was made in our defence capability.” <\/p>\n
Thanks to last year’s reform of the so-called “debt brake” which excludes defence spending from the borrowing cap, Germany will commit a total of \u20ac783.8 billion to defence-related expenditure between 2026 and 2030. <\/p>\n
Germany has earmarked \u20ac11.6 billion for Ukraine in \u200c2027 and \u20ac8.5 billion annually from 2028 to 2030. <\/p>\n
The finance ministry expects defence spending \u200bto rise from 2.8% of GDP in 2026 to 3.5% in 2029. <\/p>\n
‘WE’RE PUTTING \u200bTHE BUDGET IN ORDER’ <\/p>\n
Despite the difficult economic situation, it has \u200bbeen possible to make significant progress on fiscal consolidation and to fully eliminate the \u20ac34 billion shortfall for 2027, \u200cthe minister said. <\/p>\n
For that, the government plans to raise \u200btaxes on alcohol and cut social \u200bbenefits, according to the budget draft seen by Reuters. The draft also calls for cuts to pension subsidies. <\/p>\n
“We are putting the budget in order,” Klingbeil said. “That is my duty as finance minister.” <\/p>\n
The need for cuts in 2028 has been reduced in \u200bthe financial plan to around \u20ac22 billion. Nevertheless, there \u200cis still a funding gap of around \u20ac109 billion for the years from 2028 onwards. <\/p>\n
Following cabinet approval, discussions on the \u200bdraft budget will commence in parliament in September, with final approval anticipated by year-end. <\/p>\n
($1 = 0.8758 euros) <\/p>\n
(Reporting by Maria Martinez, \u200badditional reporting by Holger Hansen, Editing by Friederike Heine, Gareth Jones) <\/p>\n","protected":false},"excerpt":{"rendered":"By Maria Martinez BERLIN, July 6 (Reuters) – Germany’s cabinet approved the first draft of the 2027 budget…\n","protected":false},"author":2,"featured_media":49314,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2],"tags":[40735,8565,40733,5,40734,3623],"class_list":["post-49313","post","type-post","status-publish","format-standard","has-post-thumbnail","category-germany","tag-core-budget","tag-defence-spending","tag-draft-budget","tag-germany","tag-infrastructure-fund","tag-lars-klingbeil"],"_links":{"self":[{"href":"https:\/\/www.europesays.com\/germany\/wp-json\/wp\/v2\/posts\/49313","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/germany\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/germany\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/germany\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/germany\/wp-json\/wp\/v2\/comments?post=49313"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/germany\/wp-json\/wp\/v2\/posts\/49313\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/germany\/wp-json\/wp\/v2\/media\/49314"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/germany\/wp-json\/wp\/v2\/media?parent=49313"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/germany\/wp-json\/wp\/v2\/categories?post=49313"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/germany\/wp-json\/wp\/v2\/tags?post=49313"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}