Germany's 2027 Budget: A Record €561 Billion Spend, a €123 Billion Gap and Mounting Debt

At 5:55 on Friday morning, after nearly 16 hours of negotiation, the Bundestag's Budget Committee finished its final session on the 2027 federal budget. Lawmakers from the conservative CDU and CSU and their center-left coalition partner, the SPD, voted yes. The Greens, the Left Party and the far-right AfD voted no. The full Bundestag will take the final vote on November 27.

The document runs to nearly 1,000 pages. Its headline figure is planned federal spending of around €561 billion, about $620 billion. Revenue will fall well short of that, leaving a gap of €123 billion that has to be covered by borrowing.

That is not the whole debt picture. In 2025 the Bundestag approved special funds for defense and for renovating Germany's dilapidated infrastructure, and both will run for several years. Add the new 2027 debt to those loans and total borrowing exceeds €210 billion. That is the second-highest level in the history of the Federal Republic. Only 2021, during the COVID-19 pandemic, was higher, at €215.4 billion.

Opposition lawmakers were sharp in their criticism. Sebastian Schäfer of the Greens and Dietmar Bartsch of the Left Party described a "gigantic mountain of debt" and an "untrustworthy" budget. They called the policies "irresponsible" and said they come at the expense of future generations and offer no prospects for the future.

The costs trace back to several pressures. Russia's war against Ukraine will enter its sixth year in 2027. By the end of June, the federal government put its total support for Ukraine at roughly €100 billion. Answering an AfD request, it said it would keep providing political, financial, humanitarian, civil and military support for as long as necessary. The defense budget is set to reach just under €110 billion in 2027, about €27 billion more than the previous year, with further spending coming from the Bundeswehr's special fund. More than half of the new debt goes to security and defense. A faltering economy, crumbling infrastructure and the costs of the energy transition add to the load.

The largest single item, however, is the Ministry of Labor and Social Affairs, which is set to exceed €200 billion. Cuts are planned in basic income support for job seekers, but old-age pension costs keep climbing. People born in the 1960s, when more than a million children were born each year, have begun to retire. Births nearly halved in the early 1970s and have kept falling. Contributions from a shrinking workforce cannot fund pensions, so the state subsidizes them. Pension insurance contributions, split equally between employees and employers, are expected to rise to just under 20% of gross salary. The Federal Employment Agency also needs more than €8 billion in federal subsidies in 2027.

The picture looks starker against recent history. From 2014 to 2019, Germany took on no new federal debt for six years running, and sometimes had money left over. The pandemic ended that in 2020. Germany still benefits from those years: its debt-to-GDP ratio was 63.5% at the end of 2025, against more than 110% for France, 135% to 140% for Italy and well over 100% for the US. But the German Council of Economic Experts warned in its fall report that at the current pace the ratio could reach 100% by 2040. That would threaten Germany's AAA rating, which it is the only G7 country to hold and which keeps its borrowing costs low. Interest payments are expected to reach about €42 billion in 2027.

Changes before the final vote are still possible. The coalition disagrees over whether the electricity tax can be cut. Chancellor Friedrich Merz, speaking Friday at a European leaders summit in Dublin, said he expects the coalition committee to take it up again next Tuesday and that he is still committed to lowering it to the European minimum, in full, starting next year.