Germany's Cabinet on Wednesday approved a draft 2026 federal budget featuring record investment of €126.7 billion and borrowing of €174.3 billion, as the government ramps up spending to modernise infrastructure and boost defence capabilities, according to Reuters. Europe's largest economy is abandoning decades of fiscal restraint in a bid to revive sluggish growth, address infrastructure backlogs, and scale up military funding. The 2026 borrowing figure is more than three times the €50.5 billion planned for 2024 under the previous government. Total spending in 2026 is projected at €520.5 billion. Investment will rise 10 per cent from 2025 and 55 per cent over 2024. The budget is part of a medium-term framework through 2029, during which total new debt is expected to reach €851 billion, leaving a projected shortfall of €172 billion for the final three years. The surge in spending is supported by a €500 billion infrastructure fund and a revised fiscal rule allowing defence borrowing outside the constitutional debt brake. Defence outlays will climb from €117.2 billion in 2026 to €161.8 billion in 2029. Despite the loosening of borrowing constraints, the draft law urges ministries to maintain strict spending discipline. Parliamentary debate is due to begin in late September, with final approval expected by year-end. Attribution: Reuters Subediting: Y.Yasser
