Germany 2027 budget debate pits defense increases against social welfare cuts

The German Bundestag has begun deliberations on the 2027 federal budget, which proposes a significant shift in fiscal priorities. Proposed total expenditures are set to rise to 555.4 billion euros, up from 524.5 billion euros in 2026, supported by a planned net borrowing of 118.7 billion euros.

Central to the debate is a sharp increase in defense spending, which is projected to rise by 27.1 billion euros to a total of 109.7 billion euros. This increase stands in contrast to planned cuts in social sectors. Notably, the health budget is expected to decrease from 21.77 billion euros in 2026 to 14.33 billion euros in 2027.

A coalition of 14 organizations known as the Sozialstaatsbündnis, including groups like VdK, DGB, and Caritas, has issued a warning regarding these austerity measures. They argue that cuts to federal subsidies for pension and health insurance, as well as reductions in housing allowance (Wohngeld) and parental allowance (Elterngeld), threaten social stability and democracy. The coalition also expressed concern over potential staff reductions at the Federal Employment Agency and the diversion of funds from the Climate and Transformation Fund (KTF) to cover core budget deficits.