German Cabinet Approves €520B Budget for 2026

German Cabinet Approves €520B Budget for 2026
Above: German Chancellor Friedrich Merz, Federal Minister of Finance Lars Klingbeil, and Head of the Chancellery Thorsten Frei on July 30, 2025. Image copyright: Emmanuele Contini/NurPhoto/Getty Images

The Spin

Pro-government narrative

Germany's bold budget represents exactly the fiscal leadership Europe needs. By utilizing reformed rules, the government is investing heavily in critical infrastructure and defense while breaking free from the counterproductive debt brake that has handicapped competitiveness for years. This strategic approach prioritizes essential investments over outdated orthodoxy, recognizing investment today secures prosperity tomorrow.

Government-critical narrative

Germany's budget represents fiscal recklessness disguised as progress. The government has abandoned constitutional debt limits through accounting tricks, hiding borrowing in "special funds." Meanwhile, the government cannot explain how it will make up for the near €200 billion deficit hole in its plans. With debt hitting dangerous levels and reforms ignored, Germany mortgages its future for political gain.

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