Germany plans to borrow more than 203 billion euros in 2027 to accelerate its investments and strengthen its defense

Germany plans to increase its borrowing to more than 203 billion euros by 2027, according to a draft budget seen by Reuters. This larger-than-expected increase reflects Berlin's desire to bolster public investment and defense spending to support an economy weakened by the aftermath of the war, energy shocks, and years of underinvestment.

The amount of borrowing would exceed the €196,5 billion announced in April. It also marks a significant increase compared to the €50,5 billion planned for 2024 under the previous government, before Germany ended its austerity policy to revive its economy.

The draft budget is based on the assumption that the conflict in the Middle East will ease during the summer. However, German authorities warn that a prolonged disruption of the Strait of Hormuz or global oil production capacity could have "considerable consequences" for the country's economy, due to its impact on energy markets.

The draft budget for 2027, which falls within a financial framework covering the period up to 2030, projects total spending of €555,4 billion, compared to €543,3 billion in the version approved in April. Investments are expected to reach €117,5 billion, while core defense spending is projected at €109,8 billion, illustrating the priority given to strengthening military capabilities and modernizing the economy.