Germany Boosts Defence and Investment in Ambitious 2027 Budget

The fiscal roadmap, which spans a medium-term framework through 2030, relies on €203.6 billion in new borrowing. Finance Minister Lars Klingbeil defended the aggressive spending, arguing that traditional balanced-budget policies cannot guarantee national security against current threats. Core defence expenditure is slated to climb to €109 billion by 2027, up from €82.2 billion in 2026, with total security-related commitments—including support for Ukraine—reaching €130.1 billion.

To balance these outlays, the government intends to trim social benefits and increase taxes on alcohol, aiming to close a €34 billion funding gap. However, the reliance on debt has drawn sharp warnings from industry leaders. Tanja Goenner, chief executive of the BDI, cautioned that interest payments could consume nearly 20% of tax revenue by 2030. Parliament is scheduled to open formal debates on the draft in September, with a final vote expected before the end of the year.