German lawmakers approve huge 2026 budget with billions in new debt

Germany's budget for 2026 was approved by lawmakers in the lower house of parliament on Friday, with expenditure of €525 billion ($608 billion).

The plans include more than €180 billion in borrowing, greater than at any time in German history other than during the coronavirus pandemic.

"This budget once again has record investments," said Finance Minister Lars Klingbeil during the debate in parliament. "However, it is also important that the investments now flow quickly," added the Social Democrat, who is also vice chancellor.

At a total of €524.5 billion, the budget is €21.5 bigger than in 2025.

The budget includes about €108 billion in military spending, the highest since the end of the Cold War. This spending was enabled thanks to a consitutional amendment pushed through earlier this year.

Ukraine is to receive a record €11.5 billion for artillery, drones, military vehicles and other equipment for its defence against Russia.

'Financial jester'

Opposition parties have roundly criticized the budget, in part over the plans for the state to take on billions in additional debt.

The far-right Alternative for Germany (AfD) warned against high interest payments due to the new loans.

Germany is now a "financial jester" on the global political stage, said AfD lawmaker Kay Gottschalk.

The Greens and The Left argued that the extra billions were being misspent.

The coalition had squandered the opportunity to "turn their huge additional opportunities to take on debt in the largest budget ever into something good for our country," said Green Party budget officer Lisa Paus.

The Left leader Ines Schwerdtner said the budget ignored normal people's problems, citing "affordable housing, good schools, functioning daycare centres, healthcare and strong municipalities."

Transport sector set to benefit

Labour and social spending accounts for more than a third of the budget, mainly because the government has to contribute more and more money to pension insurance.

Slightly lower expenditure is planned for other social welfare benefits.

The ministry receiving the biggest single share is the Transport Ministry, led by Patrick Schnieder from Merz's Christian Democrats, who earmarked the money for roads, bridges and railways.

In addition to almost €14 billion in the core budget, Schnieder has access to more than €21 billion from a debt-financed special fund for infrastructure.

Citizens can expect some lifting of the financial burden in 2026 thanks to a higher commuter allowance, and the revival of a subsidy scheme to buy electric cars.

It is not clear yet whether a lower sales tax on food in restaurants will be passed on to consumers.