By 2029, Germany is expected to have a budget deficit of up to €172 billion. The reasons are related to the settlement of tax arrears in federal lands and the reduction of the tax burden for businesses. Such deficit parameters, covering the years 2027-2029, significantly exceed the usual framework of the «need for action» applied in the country's fiscal policy. Financial planning is related to the draft budget for 2026, which will be submitted to the Bundestag by the end of November. Previously, a deficit of up to 144 billion euros was forecast, but new calculations show a more serious gap. The partial easing of the "debt brake" has allowed for increased defense spending, but restrictions still apply to most other areas. Germany's borrowings will amount to €850 billion by 2029. These funds will be used to modernize infrastructure, arm the Bundeswehr and support the economy. This year, defense spending has reached €62.4 billion, while aid to Ukraine has reached €8.3 billion. By 2029, the Bundeswehr's budget will increase to €152.83 billion, which will amount to 3.5% of GDP. The growth of borrowing and priorities in defense policy have caused disagreements in the government. The controversy over the «debt brake» was one of the reasons for the resignation of Finance Minister Christian Lindner under former Chancellor Olaf Scholz, exacerbating the political crisis.
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