Germany passes 2026 budget with record borrowing to boost economy

Germany’s parliament approved the federal budget for 2026, authorizing over €180 billion ($208 billion) in new borrowing, as Berlin seeks to stimulate its struggling economy.

The level of debt planned for 2026 is only surpassed by the extraordinary €215 billion borrowed during the pandemic in 2021. This borrowing is made possible by a €500 billion special infrastructure fund and an exemption from Germany’s debt brake for defence spending, approved in March, Reuters reports.

The budget reflects high investment levels intended to revive Europe’s largest economy after two years of contraction, a strong commitment to defence, and an increase of €3 billion in aid to Ukraine.

The core budget totals €524.5 billion, including €58.3 billion earmarked for investments. When investments through special funds—excluded from Germany’s debt brake—are included, total investment rises to €126.7 billion, representing a 10% increase over 2025, following a 55% rise in 2025 compared to 2024.

Germany’s debt brake restricts new borrowing to 0.35% of GDP. Under the 2026 budget, the core borrowing is projected at €97.9 billion, but when combined with borrowing through special funds for infrastructure and defence, total new debt will exceed €180 billion—more than three times the €50.5 billion borrowed in 2024 under the previous government.

By Vafa Guliyeva