German cabinet to approve draft budget with more than €203 billion in borrowing, sources say

By Maria Martinez

BERLIN, July 4 (Reuters) - Germany's cabinet will approve the first draft of the 2027 budget on Monday, with total borrowing of €203.6 billion ($232.8 billion), finance ministry sources said on Saturday, confirming a Reuters report from Friday. 

• Borrowing is up from the €196.5 billion signaled in April and far above the €50.5 billion in 2024 under the previous government, reflecting higher investment and defence spending. New borrowing includes €118.7 billion in the core budget, €54.9 billion via the infrastructure fund and €30 billion from a special defence fund.

• Core defence spending will rise to €109.0 billion in 2027 from €82.2 billion in 2026. Including support for Ukraine and other security spending, the total reaches €130.1 billion. The finance ministry expects defence spending to rise from 2.8% of GDP in 2026 to 3.5% from 2029.

• Germany has earmarked €11.6 billion for Ukraine in 2027 and €8.5 billion annually from 2028 to 2030. "What stands behind this is that we will do whatever is necessary to support Ukraine," a finance ministry source said.

• Total investment will rise to €117.5 billion in 2027 from €78.9 billion in 2025, helped by a €500 billion infrastructure fund and looser borrowing rules for defence.

• Total spending in the 2027 draft budget will increase 5.9% from 2026 to €555.4 billion.

($1 = 0.8745 euros)

(Reporting by Maria Martinez. Editing by Mark Potter)