09/08/2026September 8, 2026Budget battle: Long-term investment plan? Or ruinous debt trap?
German parliamentarians began debate on the country’s 2027 budget on Tuesday, with Finance Minister Lars Klingbeil of the SPD defending what he called “painful compromises” as opposition parties railed against new debt.
“My vision is a Germany of the future that is sovereign and resilient in times of crisis. A strong country that is innovative and also socially just,” said Klingbeil.
Since taking office in mid-2025, Chancellor Friedrich Merz’s government has ratcheted expenditures to record levels in an effort to revive a flagging economy and rearm Germany’s military.
The draft 2027 budget provides for spending of €555.4 billion ($645 billion), up slightly from 2026.
Total new borrowing is set to exceed €200 billion.
The government has earmarked €118 billion for investments in AI, data centers, research and development, rail, bridges and tunnels, as well as hospitals and schools.
Opposition parties universally criticized the new spending, a clear departure from years of tight budgets that hewed to the sacrosanct “black zero,” meaning zero debt.
Now, the Merz government is on track to rack up roughly €1 trillion in debt by the end of its term, something the Left Party’s Dietmar Bartsch called “madness.”
The Greens and the AfD also accused Klingbeil of using “unconstitutional accounting tricks” to get around debt rules.
Klingbeil argued the country had no other choice but to incur debt if it planned on defending itself, noting that infrastructure in the country had also been sorely under-financed over the years as well.
The budget will come up for a vote in November and many changes are expected over the next several weeks.