Federal budget for 2027: The shock doesn't play a role for now

Lars Klingbeil brought good news. “In Mecklenburg-Western Pomerania, 58 fire service sheds are being renovated,” said the SPD Federal Finance Minister on Tuesday when he introduced the budget for 2027 to the Bundestag. This is just a small example of the positive effects of the black-red government's 500 billion euro investment program.

After years of stagnation, growth is picking up again. With details such as the fire department in Meck-Pomm, Klingbeil shared the results of his summer trip with the MPs. In view of the economic difficulties, he also felt “fears of relegation and loss” among the population. “At the same time, a lot of new things are being created in our country that give people confidence and hope,” he emphasized.

The SPD leader and vice chancellor used the phrase “our country” in every third sentence. With his speech, he also reacted to the election in Saxony-Anhalt last Sunday, without explicitly mentioning the state. “Who belongs to Germany is not decided by the color of their skin,” he indirectly countered the AfD, which will be the largest faction in the future Magdeburg state parliament.

Klingbeil called for “local patriotism” and described the state investments as a “justice offensive” from which everyone would benefit in a few years. AfD budget politician Michael Espendiller responded as follows: 2.42 euros per liter of diesel “is reason enough to vote for AfD”. The finance minister's budget receives around one euro from every liter of fuel. “Nobody is happy about renovated streets that can no longer be used because of high gas prices,” said Espendiller.

In fact, the success of the right-wing extremists provokes questions about budget policy that the finance minister neither addressed nor answered. Additionally, how might the government respond to concerns about living standards that appear to have played a major role in the election? Fuel price cap, excess profits tax for oil companies with redistribution of income to the population?

Klingbeil also remained silent about other controversial financial and social issues that are now back on the agenda, such as the actually planned abolition of the zero-deduction pension after 45 years of work, the maintenance advance for single parents, and the child allowance for poor families.

With a view to the election results, Britta Haßelmann, the leader of the Green Party, called for concrete changes that would improve everyday life for citizens. The Greens also criticized the finance minister regarding his investment policy. “Despite high debts, this budget is giving us far too little growth impetus,” complained Sebastian Schäfer, the party’s budget spokesman. In addition, “the minimum investment rate of 10 percent in the core budget is significantly undercut”.

Here the Green politician can refer to a new report from the Federal Audit Office. The state financial controllers also criticize the fact that the government coalition is using fewer funds for investments than originally agreed.

Nevertheless, Klingbeil has a point, as CDU politician Mathias Middelberg also emphasized. Thanks to the climate and transformation fund, the loan-financed special fund for infrastructure and the so-called area exception for better equipment for the Bundeswehr, the federal government's investments of around 120 billion euros are around 50 billion euros above the level of the previous government.

Klingbeil has presented a large budget that will require a lot of work from the experts in the parliamentary groups in the Bundestag in the coming weeks. In total, spending in 2027 is expected to amount to around 670 billion euros, of which around 200 billion euros will come from new loans. The Union, SPD and Greens made this considerable new debt possible by restricting the debt brake in the Basic Law.

The costs of debt are also growing accordingly. A good 40 billion euros are budgeted for this in the 2027 budget. Despite the large volume, the money doesn't seem to be enough. According to the Greens' calculations, the draft budget contains open items of around 20 billion euros that must be closed through higher revenue, for example through the sugar tax, or lower expenditure. “We have to continue saving,” admitted CDU financial politician Middelberg. This is a poor prerequisite for additional, expensive reactions to the current situation.