On Wednesday, the German government adopted the draft budget for 2026 and the financial plan through to 2029. The figures\u2014and the accompanying campaign in politics and the media\u2014make clear that the greatest social attacks in twenty years, since the infamous \u201cAgenda 2010\u201d of the Schr\u00f6der government, are imminent. The coming period will be marked by intense class struggles.<\/p>\n
Lars Klingbeil, current Finance Minister, speaking in the Bundestag in 2023 [Photo by DBT \/ Tobias Koch]<\/p>\n
Finance Minister Klingbeil is earmarking vast sums to make the Bundeswehr (Armed Forces) \u201cfit for war,\u201d to build Germany into the largest military power in Europe, and to continue the war against Russia. These funds are to be recouped at the expense of working people, pensioners and the disadvantaged, as well as from education and healthcare. The enrichment of the wealthy at the expense of the majority, which has already reached grotesque proportions, is to proceed unchecked.<\/p>\n
Klingbeil, who is also chairman of the Social Democratic Party (SPD), has already begun to prepare the cabinet for massive austerity measures. \u201cLooking ahead to the coming years, we will pursue a strict course of consolidation,\u201d he said. All ministries are obliged to contribute. \u201cEveryone in government will have to make savings. This is an immense challenge.\u201d<\/p>\n
The financial plan foresees the accumulation of \u20ac851 billion in new debt by 2029. That is nearly as much in five years as the Federal Republic incurred in the first 60 years of its existence. From 1949 to 2009, the national debt grew to one trillion euros. Nevertheless, Klingbeil’s financial plan contains an unfunded gap of \u20ac172 billion. Six weeks ago, when presenting the 2025 budget, Klingbeil had expected it to be \u20ac28 billion less.<\/p>\n
The rapidly growing deficit is due to the already approved \u201cgrowth booster,\u201d which provides tax relief for companies and compensates states and municipalities for lost revenue, as well as mounting interest payments. These are expected to rise from \u20ac35 billion currently to \u20ac60-\u20ac70 billion within four years\u2014assuming interest rates do not increase. If rates rise, the figure could reach \u20ac100 billion. The effects of the tariff war with the US, the deep crisis in the automotive, steel and chemical industries, and continued economic stagnation are not yet factored in.<\/p>\n
Nor does the federal budget address the financial crisis facing municipalities, which are responsible for a significant share of social spending, public services and investment. According to a recent report from the Bertelsmann Foundation, local authorities posted a deficit of \u20ac24.8 billion last year. Until 2022, they had recorded ten consecutive years of surpluses. That turned negative in 2023, and in 2024 the deficit tripled.<\/p>\n
Meanwhile, the chorus of voices calling for massive cuts to social spending is growing louder. At \u20ac127.8 billion, the federal contribution to pensions is the largest item in the 2026 budget, which totals \u20ac520.5 billion, and it is projected to rise to \u20ac154.1 billion by 2029. Expenditure on the citizens\u2019 benefit (B\u00fcrgergeld, welfare payments) amounts to \u20ac41 billion in the 2026 budget and has already been cut by \u20ac1.5 billion compared to the previous year.<\/p>\n
This is a direct consequence of the war policy. The 2026 budget allocates \u20ac82.7 billion to military spending, \u20ac20 billion more than the current year. Added to this are further outlays from the Bundeswehr \u201cspecial fund\u201d established three years ago, bringing the total military expenditure to \u20ac128 billion. By 2029, this is set to rise to \u20ac153 billion, which corresponds to NATO\u2019s target of 3.5 percent of GDP, and will be funded entirely from the regular federal budget.<\/p>\n
Economics Minister Katherina Reiche (Christian Democratic Union, CDU), a long-time energy industry lobbyist, was the first cabinet member to launch a campaign for a further increase in the retirement age, which is set to reach 67 by 2031. \u201cWe must work more and longer,\u201d she demanded in the\u00a0Frankfurter Allgemeine Zeitung,\u00a0saying that was \u201cunavoidable.\u201d In the long run, it was not sustainable, she argued, \u201cthat we work only two-thirds of our adult lives and spend one-third in retirement.\u201d<\/p>\n