By Maria Martinez
BERLIN (Reuters) -The German cabinet approved on Wednesday a 2026 draft budget featuring record investment of 126.7 billion euros ($146.41 billion) alongside borrowing of 174.3 billion as the country aims to bolster infrastructure and defence.
Europe’s largest economy, which has gone from economic powerhouse to the euro zone’s laggard, is throwing off decades of fiscal conservatism in an effort to revive economic growth, modernise its crumbling infrastructure, and scale up military spending.
The 2026 draft budget, part of a medium-term financial framework extending to 2029, allocates total spending of 520.5 billion euros.
The planned investments mark a 10% increase over 2025 and follow a 55% increase compared to 2024.
The investment surge is supported by a 500 billion euro infrastructure fund and an exemption from debt rules for defence spending approved in March.
2026 borrowing will be more than three times higher than 2024’s 50.5 billion euros under the former government.
Following cabinet approval, budget discussions will commence in parliament at the end of September, with final approval anticipated by year’s end.
($1 = 0.8654 euros)
(Reporting by Maria Martinez, editing by Kirsti Knolle and Miranda Murray)
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