Revolution in the federal budget: 500 billion for security and climate!

Revolution in the federal budget: 500 billion for security and climate!

On June 24, 2025, Finance Minister Lars Klingbeil (SPD) will present the first budget of the black-red coalition with a total volume of around 500 billion euros. The aim is to make Germany more modern and competitive. This budget is characterized by the easing of the debt brake, which allows spending on security above a certain level to be financed entirely through debt. In addition, a new loan-financed special fund for infrastructure and climate was introduced.

This year the government plans to raise over 140 billion euros in new debt, which will result in a total of around 185 billion euros in new debt by 2029. Germany's debt ratio is currently around 63% of gross domestic product and is expected to rise to over 80% by 2029. Despite the critical voices, especially from the Greens, who note that new debts do not lead to additional investments, an investment volume of around 115 billion euros is estimated.

Planned investments and expenses

The distribution of investments is diverse:

• 22 Milliarden Euro fließen in die Bahn
• 4 Milliarden Euro werden in den sozialen Wohnungsbau und die Städtebauförderung investiert
• 4 Milliarden Euro sind für die Digitalisierung vorgesehen
• 25 Milliarden Euro stammen aus dem Klima- und Transformationsfonds

Particularly noteworthy are the significant increases in the defense budget, which is expected to rise to 150 billion euros by 2029 in order to achieve NATO's target of 3.5% of economic output for external security. This entails a broad discussion, particularly regarding the consent and necessity of these funds. Corporate income tax will also be gradually reduced from 2028, representing one of the first tax reliefs for companies in two decades.

Criticism and controversy

Despite the comprehensive plans, cuts, for example in the area of ​​development aid, are also criticized. The federal government emphasizes that additional spending requests from the ministries were rejected in order to promote budget consolidation. In addition, there are plans to cut staff numbers in the federal government, although this is not yet visible as new hires have taken place.

In the context of the budget, the German Bundestag discussed several draft laws to amend the Basic Law on March 13, 2025. In particular, a bill from the SPD and CDU/CSU proposes to exempt defense spending from the debt brake above a certain level and to set up a special fund of 500 billion euros for infrastructure investments. These proposals were discussed as part of the coalition negotiations following the federal election, which began at the beginning of the year. Critics from AfD, Die Linke and BSW expressed concerns about the comparison and content of these laws.

Another controversial point is the Greens' demand for a clear definition of how the funds from the special fund are to be used. The draft also wants to make it possible for 100 billion euros to be made available to the countries for investments. However, a two-thirds majority in the Bundestag and Bundesrat is required to change the Basic Law.

While the coalition partners consider a fundamental change in the security architecture to be necessary, the debate about financial design and the use of funding remains exciting and is polarizing political forces in Germany. Responsibility for these significant financial decisions continues to be intensively discussed as the political groups work on solutions to address both the security and economic challenges.

For more information, see BR.de and Bundestag.de.