Germany’s budget for 2026 on Friday cleared a key hurdle ahead of a final vote in parliament later this month, with Chancellor Friedrich Merz’s government set to borrow an unprecedented €180 billion ($210 billion) next year.

After marathon negotiations, the Bundestag’s budget committee – whose approval is effectively the last step before the plenary vote – signed off on a €524.5 billion spending plan overnight, some €4 billion more than originally proposed.

“This coalition is delivering,” said Finance Minister Lars Klingbeil, whose Social Democrats (SPD) are the junior party to Merz’s conservative bloc in the government.

Klingbeil touted massive investments to boost the country’s economy and security, arguing their impact is reflected in improved prospects for economic growth from next year onwards. “And that gives us confidence.”

The budget, which sets spending levels for each ministry in 2026 and outlines which projects will receive funding, relies on substantial new borrowing.

The committee authorized nearly €98 billion in fresh debt for the core budget, around €8 billion more than in the government’s initial draft.

Additional loans from special funds created earlier this year for defence and infrastructure are expected to push total borrowing to more than €180 billion in the 2026 budget.

The plans were roundly criticized by opposition lawmakers. Sebastian Schäfer from the Greens said that new opportunities for additional investment were being used far too little.

“This is a criminal waste of growth opportunities,” he said.

Dietmar Bartsch from The Left lamented that high debt-financed spending would produce only small growth next year.

“This budget does very little for the majority of citizens and businesses,” Bartsch argued. “The only thing being financially boosted is armaments.”

Meanwhile, Michael Espendiller from the far-right Alternative for Germany (AfD) condemned the “gigantic debts” included in the budget.

The Bundestag, Germany’s lower house of parliament, is due to hold a final vote on the budget during the parliamentary week of November 25–28.

Final changes to the original draft included €3 billion more in military aid for Ukraine, lifting the total to €11.5 billion.

According to the Defence Ministry, the sum represents the largest German contribution to Ukraine’s defence against Russia to date.

Another €1.7 billion in borrowing was also added at the last minute for care insurance in an effort to avoid higher contributions from workers.

The 2026 budget was the second presented in recent months by Klingbeil, after this year’s budget was delayed due to February’s parliamentary elections.

Further challenges lie ahead, with a massive $22 billion hole in the budget for 2027 according to current estimates.

Spending cuts are expected ahead, with Klingbeil set to discuss an austerity package with Merz and Bavarian Premier Markus Söder around the turn of the year

-dpa