Germany's Planned Expenditures for 2026: Kindergarten Programs and Deutschlandticket
The German government has approved a draft budget for 2026, marking a significant shift in spending priorities. The proposed budget, amounting to approximately €520.5 billion, represents a 3.5% increase from this year's expenditure.
The 2026 budget, drafted by the new black-red coalition consisting of the Christian Union parties (CDU/CSU) and the SPD, aims to modernize infrastructure, boost economic competitiveness, and enhance national security. The budget includes record-high investments totaling €126.7 billion, with a substantial portion allocated to infrastructure modernization, particularly public investment in railways (€19 billion).
Defence and military expansion are also high on the agenda, with plans to make Germany Europe’s largest military power. This includes supporting ongoing geopolitically motivated military readiness and arms modernization programs, with the German army's budget set to increase by about 32 percent to around €128 billion for the year 2026.
Economic growth is another key focus, with measures planned to address issues like bureaucracy, energy costs, and taxes. The budget also promises increased funding for sectors such as digitalisation, education, and childcare facilities (Kitas).
However, the budget comes with fiscal sustainability concerns. An unfunded financing gap of €172 billion through 2029 is projected, largely due to tax cuts and compensatory payments to regional governments. As a result, the Finance Minister has warned of major austerity measures starting in 2027, requiring spending cuts across all ministries to manage the growing debt burden.
Social services, education, and healthcare are expected to experience cuts or insufficient funding as military and infrastructure spending priorities take precedence. Public festivities and cultural events, such as those at Berlin’s Brandenburg Gate, are being canceled or scaled back.
The budget also does not include funding for a reduction in taxes on flights or for a reduction in electricity taxes for private households. However, a reduction of VAT on food in restaurants is planned for 2026.
The budget agreement can be seen as an attempt by the conservatives to stimulate the economy and boost Germany's infrastructure and defences. The federal budget plans for the year 2026 also include the continuation of the Deutschlandticket (a train ticket) and the allocation of around €84.4 billion from special funds for infrastructure and climate protection.
The approved 2026 budget follows the federal budget plans for the year 2025, which were approved a month ago. The budget draft for 2026 promises increased funding for various sectors, including bridges, railway lines, the German army, digitalisation, and education. Further changes to the federal budget were made at the top of July.
The 2026 budget, focused on modernizing infrastructure, boosting economic competitiveness, and enhancing national security, is a significant move in business and finance, reflecting the priorities set by the new black-red coalition. Political debates revolve around fiscal sustainability concerns, with potential austerity measures looming due to an unfunded financing gap, possibly impacting social services, education, and healthcare.
