Germany approves record budget: investments and higher defense spending

On Thursday, the German parliament passed the country's first regular annual budget since far-reaching reforms to relax fiscal rules came into force at the beginning of this year.

It secures record investments to stimulate the economy and, at the same time, a clear commitment to defense spending.

The budget allows for total investments of nearly €116 billion. These are possible thanks to a €500 billion infrastructure fund and an exemption from debt rules for defense spending that was approved in March.

Europe's largest economy has been operating on a provisional budget since the former governing coalition collapsed in November last year and was unable to pass spending plans for 2025.
The core budget for this year provides for spending of €502.5 billion.

After taking into account investments from the infrastructure fund and a further €100 billion defense fund created by former Chancellor Olaf Scholz after Russia's invasion of Ukraine, the total volume of the budget amounts to €591 billion.

The core budget provides for new loans of €81.8 billion for 2025.

Total borrowing will rise to €143.2 billion after adding €37.2 billion from the special infrastructure fund and €24.1 billion from the special defense fund, according to a spokesperson for the Ministry of Finance.

(reuters, red)