Federal budget: many debts, big gaps – Klingbeil’s second household

The federal government is heading for major budget problems in the coming years. The black and red coalition has to plug billions of billions of holes. In financial planning there is a gap of around 172 billion euros in 2027 to 2029, as was said from government circles. We were talking about the central financial policy challenge for the next few years. The planning is part of the draft for the Federal Budget 2026, which the cabinet wants to decide on Wednesday. The budget is to be adopted by the Bundestag at the end of November.

Corner values of the household 2026

Federal Finance Minister Lars Klingbeil (SPD) is planning to spend 520.5 billion euros in the coming year, which is 3.5 percent more than this year. The budget for this year has not yet been decided, which should happen in September.

The investments are expected to be 126.7 billion euros in 2026. Investments are planned, for example in the renovation of bridges and the rail network, for digitization, education, research and development as well as affordable living space.

In 2026, the federal government plans to start new loans of 89.9 billion euros in the core budget. In addition, there are new debts of a total of 84.4 billion euros from the two special funds – on the one hand for infrastructure and climate protection, and on the other hand for the Bundeswehr. In total, new debts of more than 850 billion euros are planned between 2025 and 2029.

The funds from the 100-billion euro special assets for the Bundeswehr are used up in 2028. In order to be able to spend much more money on the Bundeswehr afterwards, the debt brake for defense spending was relaxed.

With regard to the so-called NATO quota, it was said that in 2029 3.5 percent of the gross domestic product for defense should be spent. Against the background of the threat of the Russian attack war against Ukraine, the defense capacity of the Bundeswehr is to be significantly strengthened.

“Need for action” increased

The gaps in the budget are talking about an “need for action” in terms of household. It is common for them to be in financial planning. Government circles said that the needs were very high. In mid -June, Federal Minister of Finance Lars Klingbeil (SPD) had assumed a household gap of 144 billion euros in the presentation of the 2025 budget in financial planning for the years 2027 to 2029.

This gap has now increased due to compromises from the federal government. Specifically, in 2027 it was a gap of 34.3 billion euros, in 2028 a “need for action” of 63.8 billion and a gap of 74 billion in 2029.

The reasons for the larger holes: On the one hand, it is about billions in compensation for tax failures of the federal states and municipalities by an already decided “growth booster” of the federal and state governments – the economy is to be boosted with tax relief from companies.

In addition, there is the decision by the CDU, CSU and SPD that the expansion of the mother’s pension should act as early as January 1, 2027 and thus a year earlier than planned. The Federal Government also plans to support financial aid for municipal old debts. In addition, the federal government has to pay significantly more money for interest expenses.

Bundestag and the Federal Council had decided on a total of 500 billion euros in special funds for infrastructure and climate protection. Of these, 100 billion go to the countries. When stuffing the household holes, the money is only of limited use, because it should be additional investments – even if the Greens in particular see a large “shift station” from the special fund into the regular household.

Coalition relies on more growth

Germany threatens the third year in a row without economic growth – this has noticeable on the income. The Federal Government primarily relies on the economy to jump on and that there are more tax revenue. Reforms are also planned, so planning procedures should become faster. In the coming years, the Federal Government’s focus will be increasingly on consolidation, it said.

In government circles, reference was made to planned savings in the federal personnel and administrative expenditure. In addition, it was said that departments should understand how difficult and challenging the situation was. Background: In the case of budget planning, Klingbeil was faced with the wishes of his cabinet colleagues after multi -billion dollar expenditure. An example is the traffic hull.

The Union chief House House Christian Haase (CDU) said that the coalition had agreed on a variety of measures in which the expenses should be put to the test.

According to the government draft, there should be savings for the 2026 budget, for example in the event of development expenditure. Savings are also emerging in the promotion of heating: In the climate and transformation fund- a special pot in addition to the core budget- there should be significantly less money for climate protection in the building sector.

It is questionable whether the Federal Government can finance projects announced in the coalition agreement – measures are generally subject to financing. Financial scope would have to be developed, for example for electricity tax reduction for all companies and for private households.

The coalition agreement also says that the income tax for small and medium -sized incomes should be reduced to the middle of the legislature – that would cost many billions.

Reform of the debt brake is controversial

There should be controversial debates within the federal government about a general reform of the debt brake in the Basic Law. An expert commission should make suggestions.

Klingbeil said that a clever modernization is needed to ensure permanent scope for action for investments and also a limitation of the debt burden. However, the Union has already dampened expectations of far -reaching loosening.

Bartsch: The welfare melt of the welfare state threatens

A reform of the social systems should also play an important role in the consolidation of the household, it was said from government circles. Because the federal grant to pension insurance continues to increase.

A reform of the citizens’ allowance with the aim of bringing more citizenship money recipients into the labor market should bring savings. Conflicts within the coalition, for example in pension policy, are inevitable.

Left-wing MP Dietmar Bartsch said with a view to the household holes that Klingbeil threatened to lose control after a few months. If he and Chancellor Friedrich Merz (CDU) held on the “excessive upgrade plans”, threatened a meltdown of the welfare state.