The German government approved key targets for its 2027 budget on 29 April 2026, with total borrowing set at €196.5 billion ($229 billion) and €11.6 billion ($13.5 billion) earmarked to support Ukraine, Reuters reports.
The figure marks a sharp departure from the $58.8 billion borrowed in 2024 under the previous government. As Reuters notes, this year's budget already provides for $209.7 billion in new debt — the result of Germany abandoning decades of fiscal conservatism in 2025 in an effort to revive its moribund economy. The 2027 draft, part of a medium-term financial framework extending to 2029, allocates total spending of $632.9 billion, 3.6% more than in the previous year.
Since Russia's full-scale invasion on 24 February 2022, Germany has provided Ukraine with approximately $64 billion in military support and $45 billion in bilateral civilian assistance, making it Kyiv's largest European backer, according to the German Finance Ministry's end-2025 figures.
Defence at the centre
According to Reuters, core defence spending is set to rise to $123.3 billion in 2027 from $96.3 billion in 2026. Including the special defence fund and funds for Ukraine, total defence spending will reach $168.8 billion next year.
Chancellor Friedrich Merz linked the increase to recent international developments. "Developments over the past year, including in Iran in recent months, show how important investments in our defence capability are," he told reporters, as quoted by Reuters.
Combined with other government defence expenditure, the package amounts to 3.1% of GDP in 2027 — in line with NATO commitments, the agency reports. That share is expected to reach 3.7% of GDP by 2030. NATO leaders agreed at a summit last year to spend 5% of GDP on defence and related investments by 2035.
New borrowing in the core budget is set at $129.1 billion, with a further $67.8 billion borrowed through the infrastructure fund and $32 billion through the special defence fund. The latter, Reuters notes, was approved by former chancellor Olaf Scholz after Russia's full-scale invasion of Ukraine.
Ukraine support and the EU loan
Berlin will provide Ukraine with $13.5 billion in 2027, followed by $9.9 billion per year between 2028 and 2030, according to the key points approved on 29 April.
Asked about the reduction from 2028, Finance Minister Lars Klingbeil pointed to the $104.8 billion EU loan for Ukraine — previously blocked by Hungary under outgoing prime minister Viktor Orban, and since approved by EU members, Reuters reports. Klingbeil added that the figures in the financial framework could change depending on Ukraine's needs.
Investment package
Total investment in the 2027 draft budget reaches $138 billion — $43.8 billion more than under the fiscal plan in place before the $582.5 billion infrastructure fund and the exemption from debt rules for defence spending were approved in 2025, according to Reuters.
Germany's special infrastructure and climate fund will focus primarily on transport, digitalisation, and hospital infrastructure, the agency reports, with Berlin identifying these as the most urgent areas of underinvestment.
"Our top priority is to secure jobs, create new ones, and ensure economic growth," Klingbeil said, adding that 2027 would mark the third consecutive year of record investments.
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