By Nathan Abbington
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| Cover Image Attribute: The Reichstag building, the seat of the German Bundestag, which serves as the national legislature of the Federal Republic of Germany. As the lower chamber of the federal parliament, it is the sole constitutional institution at the federal level that is elected directly by the citizens of Germany. |
Germany’s new budget for 2025, hashed out in heated Bundestag debates and greenlit by the cabinet, feels like a moment where the country is holding its breath, deciding what kind of future it wants. The plan, pieced together by a fresh coalition of the Christian Democratic Union (CDU), Christian Social Union (CSU), and Social Democratic Party (SPD), is a bold swing—pouring money into crumbling bridges, outdated schools, and a beefed-up military, all while leaning heavily on borrowed cash. It’s a plan that promises to fix what’s broken and keep Germany safe, but it’s also stirring up tough questions about what gets left behind and whether the math will add up down the road. As a German, you can’t help but feel the weight of this moment, wondering if the everyday hassles—like late trains or spotty internet—will finally get better, or if the cost of this ambition will hit too hard.
The budget lays out €503 billion in spending for 2025, with €143 billion coming from loans, part of a staggering €847 billion in borrowing planned over the next few years. This is a sharp turn from Germany’s old playbook, known for its tight grip on debt. The shift comes after the last government, led by Chancellor Olaf Scholz, fell apart in November 2024 over budget fights, leading to snap elections in February 2025. The new coalition, desperate to tackle Germany’s long list of problems, has thrown out the rulebook, scrapping the “debt brake” to fund a €500 billion infrastructure overhaul and make room for defense spending. Finance Minister Lars Klingbeil, who doubles as SPD co-chair and vice-chancellor, is the face of this push. “Our country’s investment backlog is huge,” he told lawmakers, listing off the frustrations so many Germans know too well: “Dilapidated roads, collapsing bridges, school and university buildings in a state of disrepair, trains that are never on time, no nationwide internet access.” His promise? Real change, the kind you can see and feel. “We want citizens to feel in their everyday lives that something is changing, that the swimming pool is getting new showers, that the rails are being renovated, the bridges are being stabilized, and the fiber optic cable is being laid,” he said, painting a picture of a Germany that works again.
The budget’s big focus is infrastructure, with €115.7 billion set for 2025 and €123.6 billion for 2026, a huge jump from €74.5 billion last year. This money is meant to patch up the country’s worn-out backbone—think potholed roads, creaky bridges, and schools where the heat barely works. It’s also a lifeline for an economy that’s been shrinking for two years straight, Europe’s biggest but lately its weakest. Klingbeil, who calls himself an “investment minister,” believes fixing these things will get cash flowing and put Germany back on its feet. It’s a plan that feels personal for anyone who’s cursed a delayed train or lost Wi-Fi in the middle of a call. But it’s also about bigger stakes—keeping Germany strong in a Europe that’s nervous about far-right gains and a U.S. under President Donald Trump pulling back from the continent. “With this budget and the 500-billion-euro investment fund, we are setting in motion what we need now to ensure new economic strength, make our country modern and future-proof and to enable safe living in Germany in the future as well,” Klingbeil said, trying to sell the idea that this is Germany’s shot to get ahead.
Then there’s defense, where the budget pulls no punches. Germany plans to ramp up military spending from €95 billion in 2025 to €162 billion by 2029, aiming to hit 3.5% of its economic output, part of NATO’s push for 5% overall. This comes as Russia’s war in Ukraine keeps nerves raw, and NATO’s expecting Germany, Europe’s heavyweight, to step up. Defense Minister Boris Pistorius called it “a historic turning point,” speaking before jetting off to a NATO summit in The Hague. “For us as the largest economy and the largest NATO partner in Europe, the issue of external security and defence capability is once again an absolute priority in government action,” he said. Klingbeil backed him up, saying Germany needs to be “capable of deterrence and defense.” He’s trying to end an old argument about what matters more—tanks or trains, helping Ukraine or saving the planet. “Whether to invest in the Bundeswehr or industry, whether to help Ukraine or invest in climate protection are no longer conflicting interests,” he told the Bundestag. “I say very clearly here: we need to do it all.” It’s a line that sounds reassuring, but you wonder if it’s really that simple.
Here’s where it gets tricky: all this borrowing comes with a catch. Interest payments are set to skyrocket, from €30.2 billion in 2025 to €61.9 billion by 2029, eating up over 10% of a €573.8 billion budget. That’s already spooking investors—Germany’s 30-year bond yield hit 3.065%, and the 10-year climbed to 2.60%. Sure, Germany’s debt interest is still lower than France or Italy’s as a share of GDP, per the International Monetary Fund, but those numbers feel cold when you think about what they mean: less money for other things. Klingbeil admits savings will be needed to keep interest costs in check, and with a €100 billion defense fund from 2022 running dry by 2027, the regular budget will have to pick up the slack. That’s going to squeeze everything else, from healthcare to schools.
Not everyone’s buying this plan. The socialist Left Party is fuming, saying it’s all wrong-headed. “The people in the cities and municipalities don’t need tanks, they need functioning daycare centers, buses and an affordable energy transition,” they said in a statement that hits home for anyone struggling to find a daycare spot or afford their electric bill. It’s a reminder that while the government’s talking big about bridges and jets, a lot of Germans are just trying to get by. The budget’s still got hurdles to clear—debates wrap up July 11, then it’s off to committees before a September vote. Meanwhile, Klingbeil’s already working on the 2026 draft, due for cabinet review July 30, with its own parliamentary showdown set for November.
This budget feels like Germany betting on itself, hoping a big push on infrastructure and defense will fix what’s broken and keep the country strong. The €500 billion infrastructure fund, plus €270 billion more in loans and what’s left of that 2022 defense fund, shows how all-in the coalition is. But the debt’s piling up, and those interest payments are a dark cloud. Will the new showers at the local pool or the smoother train rides Klingbeil’s promising actually show up? Or will the bill come due before the benefits kick in? The Left Party’s gripes about daycare and buses aren’t just noise—they’re a warning that people need help now, not just shiny new bridges later.
As Germany dives into this plan, it’s not just about money—it’s about what kind of country it wants to be. The NATO summit’s looming, and Pistorius knows the world’s watching, saying expectations for Germany are “high, and rightly so.” But back home, the real test is whether this budget delivers for the folks dealing with late buses and leaky school roofs. The Bundestag’s debates over the next few months will be a battleground, as the coalition tries to prove it can pull off this high-wire act without crashing. For now, Germans are left hoping the promise of a better tomorrow doesn’t come with a price tag they can’t afford.
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