The Federal Cabinet approved the draft for the 2027 federal budget on Monday. Sources indicate that this plan involves new borrowing of nearly 200 billion euros. Despite the inclusion of planned savings and increases in taxes, financial projections suggest a deficit exceeding 100 billion euros will emerge starting in 2028.
Finance Minister Lars Klingbeil (SPD) is scheduled to officially present the budget plan on Monday afternoon. The draft earmarks 555.4 billion euros for core expenditures in 2027, marking a substantial rise compared to the current year’s spending. In terms of finance, net credit uptake is set at 118.7 billion euros for 2027, supplemented by additional debt taken on through special funds designated for infrastructure, climate neutrality, and the Bundeswehr.
To cover the necessary financial requirements, the government plans to implement cuts across social sectors, increase various taxes, and utilize existing reserves. Contributing to the financial relief are proposed savings within the pension and healthcare systems, alongside reforms targeting housing and parental benefits. Furthermore, fiscal measures include the introduction of a plastic tax and raising the existing taxes on alcohol and tobacco products.
