Germany set for near-record new borrowing in 2027 after difficult budget deal
EWG•Germany’s budget committee backed a €561 billion spending plan for 2027, with total new borrowing of €210.4 billion, just below the 2021 record of €215.4 billion.
1. Budget plan approved
Germany’s parliamentary budget committee backed a €561 billion spending plan for 2027 after weeks of coalition talks, clearing the way for a parliamentary vote. Total new borrowing is set to reach €210.4 billion, including about €123 billion from the core budget.
2. Taxes and spending
The coalition scrapped a proposed tax on plastic packaging and delayed a tax on sugared drinks until 2028. A planned electricity-tax cut was also delayed after lawmakers failed to agree on €5 billion in financing measures, though Chancellor Friedrich Merz said he remained committed to reducing the tax to the European minimum, with the reduction taking full effect next year.
3. Coalition pressures
The budget combines infrastructure, military and research investment with welfare spending. An economist said the absence of major welfare cuts and tax reductions reflected difficulties reaching agreement between coalition partners. Germany’s Council of Economic Experts forecast 1% economic growth next year and called for spending restraint to control deficits.
