(de-news.net) – The Bundestag’s Budget Committee approved the 2027 Federal Government budget early Friday, endorsing record expenditures of approximately 560.9 billion euros and net borrowing of nearly 123 billion euros. The borrowing figure represents an increase of almost 4 billion euros over the Federal Government’s original draft. Additional debt-financed investments in infrastructure and defense could push total new borrowing across the core budget and special funds above 200 billion euros. Borrowing will finance approximately one-third of planned expenditures, providing substantial resources for public investment and the coalition’s policy priorities.
Meanwhile, the coalition’s commitment to reducing electricity taxes for businesses and private households remains under consideration as the governing parties work toward an appropriate financing arrangement. The Union and SPD intend to revisit the proposal at Tuesday’s coalition committee meeting, leaving room for further adjustments before final parliamentary approval. Elsewhere in the budget negotiations, the proposed plastics tax was abandoned following objections from business associations, while the introduction of a tax on sugar-sweetened beverages was postponed from 1 July 2027 to 1 January 2028.
The Bundestag is scheduled to give final approval to the budget during its 24-27 November session. Beyond establishing ministerial spending limits, the legislation determines which public projects and policy priorities will receive Federal Government funding in 2027.
Committee reaches agreement after intensive budget negotiations
After intensive overnight deliberations, the governing Union and SPD reached compromises on several contentious issues, demonstrating their ability to establish a comprehensive spending framework despite considerable fiscal pressures. Although the proposed electricity tax reduction remains unresolved, progress was made on other policy priorities, including the decision to introduce a tax on sugar-sweetened beverages in January 2028.
Both governing parties presented the budget agreement as evidence of the Federal Government’s capacity to act despite significant financial constraints. Thorsten Rudolph, the SPD parliamentary group’s budget spokesman, said the coalition had successfully addressed a financing gap of 34 billion euros. He emphasized that reaching agreement on a federal budget was essential to ensuring the Government’s ability to govern. As a comparison, he pointed to the previous coalition’s collapse approximately two years earlier, when disagreements over a substantially smaller, 4 billion euro budget shortfall contributed to its downfall.
Rudolph maintained that the proposed electricity tax reduction should be supported by sustainable financing rather than additional borrowing. Although the SPD also favors the measure, its implementation would require savings or spending reallocations elsewhere in the budget. Establishing a reliable financial basis would therefore be essential before the coalition could proceed.
Christian Haase, budget spokesman for the CDU/CSU parliamentary group, noted that amendments remained theoretically possible before the budget’s final parliamentary approval. Nevertheless, he considered abandoning the planned expansion of the mothers’ pension unlikely, explaining that reversing a commitment negotiated under the coalition agreement would involve considerable political effort.
Klaus Holetschek, Chairman of the CSU parliamentary group in the Bavarian State Parliament, also defended the planned expansion of the mothers’ pension against proposals to sacrifice it in exchange for lower electricity taxes. Although the two initiatives involve comparable expenditures, he argued that the coalition should honor both policy commitments rather than frame one social justice objective as competing with another. The pension expansion concerns approximately 9 million mothers and is already enshrined in legislation. Holetschek described its implementation as an important matter of fairness and recognition, emphasizing the need to maintain the coalition’s commitment.
Coalition explores further energy cost relief within fiscal constraints
CDU budget policymaker Mathias Middelberg called for greater consistency between the coalition’s public commitments and its subsequent decisions. Referring to Chancellor Friedrich Merz’s repeated support for an electricity tax reduction, he stressed that political leaders must deliver on promises made to citizens to maintain public confidence. He also recommended communicating agreed policies more precisely while allowing coalition partners to conduct intensive negotiations behind closed doors, including contentious discussions over competing priorities.
Federal Finance Minister Lars Klingbeil (SPD) likewise emphasized that any reduction in electricity taxes would require credible financing. The approximately 5 billion euros needed to implement the measure had not been identified during the budget negotiations, the SPD leader said. At the same time, he highlighted several initiatives already being pursued to ease energy costs, including lower electricity grid charges, the abolition of the gas storage levy and a temporary reduction in fuel taxes.
Klingbeil indicated that he remained open to examining proposals from coalition partners and intended to bring additional financing suggestions to Tuesday’s meeting. He also sought to put the negotiations into perspective, rejecting suggestions of an escalating conflict between the Union and SPD. Instead, he emphasized their shared responsibility for addressing the challenging fiscal environment and maintaining the Government’s capacity to act.
Looking ahead, the financial outlook for 2028 will require further budgetary adjustments, with the projected financing gap currently estimated at approximately 25 billion euros. Klingbeil stressed that additional tax reductions would consequently need to be accompanied by corresponding financing measures. Nevertheless, the Federal Government retains a limited financial reserve for future planning. According to the Finance Ministry, approximately 3.8 billion euros remained in the reserve inherited from previous administrations following the conclusion of the 2027 budget negotiations.
Opposition questions investment priorities and financing strategy
The Green Party and the Left Party criticized several aspects of the approved budget, focusing particularly on investment priorities, borrowing requirements and environmental policy. Their assessments highlighted differences over how the coalition intends to balance immediate spending commitments with longer-term economic and fiscal objectives.
Sebastian Schäfer, the Greens’ parliamentary budget spokesman, acknowledged that the coalition had established its priorities but considered the outcome insufficient. He questioned the continuation of several subsidies that he regarded as expensive and having limited effectiveness, particularly those with negative environmental consequences. He also criticized the coalition for not yet implementing its commitment to reduce electricity taxes for all consumers.
Schäfer further questioned the distribution of public investment across different budget categories, arguing that the coalition had reorganized expenditures to demonstrate an investment ratio of 10 percent. According to his assessment, only one-third of transportation spending was directly reflected in the transport budget, while the remaining expenditures were allocated through Autobahn GmbH and the defense budget.
He also highlighted the planned net borrowing of nearly 123 billion euros in the core budget, alongside almost 88 billion euros through the special fund for the armed forces. Tax revenues would cover approximately 71 percent of projected expenditures, a financing structure that Schäfer considered difficult to sustain over the longer term.
Dietmar Bartsch, the Left Party’s parliamentary budget spokesman, similarly called for greater investment in future-oriented projects and structural economic reforms. He argued that the coalition’s approach placed substantial financial obligations on future budgets while leaving important structural challenges unresolved. To strengthen the country’s long-term economic and fiscal position, Bartsch advocated a comprehensive reform agenda and major tax reform.