Weekly updates from the German Federal Parliament (Bundestag)

Germany Unveils Ambitious Budget Plan for 2026

In a time of extraordinary challenges, including the ongoing pandemic and the war in Ukraine, Germany has unveiled its federal budget plan for 2026. The plan, which extends through the fiscal planning period to 2029, allocates a record investment total of approximately €126.7 billion in 2026, focusing on future-oriented areas such as climate protection, digitization, education, research, and infrastructure.

Climate Protection and Transformation

Around €21.7 billion in 2026 is allocated from the Climate and Transformation Fund to support Germany’s climate action goals and the transition to climate neutrality. This fund backs investments targeting sustainability and green technologies.

Infrastructure and Transport

Modernizing transport infrastructure is a strong priority, with €33.7 billion dedicated in 2026 for roads, railways, and other transport modes to improve connectivity and sustainability. Additionally, the government is enhancing housing investment, earmarking €4 billion for social housing, which is €500 million more than the previous year.

Digitization and Digital Technology

Investments target digital infrastructure and technology upgrades, ensuring Germany advances in connectivity and digital capacities. Digital technology funding is part of broader investment categories but specifics within the totals emphasize modernization and innovation.

Education and Childcare

Substantial investments continue in education and childcare facilities, supporting workforce development and social infrastructure. While exact funding numbers aren't isolated, education is explicitly prioritized within the investment bundle.

Research and Development

R&D investment receives €17.1 billion in 2026, supporting innovation and technological advances. This includes continued funding for programs like the Aerospace Research Program (LuFo), with a yearly budget of around €300 million aimed at sustainable aviation and climate-neutral technologies.

Defense and Internal Security

Defense spending is rising sharply, planned at around €82.7 billion in 2026, reflecting increased prioritization for national security. Internal security funding is also increased by €800 million to €16 billion.

The overall federal government expenditure for 2026 is about €520.5 billion, a 3.5% rise from 2025, with investments maintained at a high level (~€120 billion annually) through 2029 to sustain growth, modernization, and climate goals.

Notably, much of the investment is financed partially through special off-budget funds intended to bypass Germany’s constitutional debt brake while maintaining fiscal effort toward modernization and green transition.

Other Key Investments

The federal government has provided an additional one billion euros for the climate-friendly construction of social housing, bringing the total available to drive forward both the high-quality energy-efficient new construction and the energy-efficient renovation of social housing to two billion euros.
The German Agency for Transfer and Innovation (DATI) is being established to strengthen regional innovation promotion and contribute to the faster implementation of scientific ideas into practice.
The federal budget 2022 is investing almost €51 billion in climate protection, digitization, education, research, and infrastructure.
The special fund for the Bundeswehr is being anchored in the Basic Law to provide planning security for the best possible equipment of soldiers.
An additional budget is being introduced to provide funds for mitigating the effects of the Ukraine war, cushioning rising energy costs, and expanding humanitarian aid for Ukraine.
The government's draft budget includes initial measures in response to the impact of the Russian attack on Ukraine, such as €1.5 billion for gas reserves and one billion euros for measures in humanitarian aid, crisis management, and food security.

The federal budget 2022 is being drawn up amidst these challenging times, with the German Bundestag currently advising on the second government draft of the federal budget 2022, and the financial plan until 2026. The draft budget shows appreciation for societal engagement, with a 61 million euro increase in the budget of the Technical Relief Agency (THW). Nurses are receiving a care bonus to acknowledge their extraordinary efforts during the pandemic, with the federal government providing one billion euros for this purpose.

In addition, short-time work benefits are being extended until the summer, and funding for parental sick pay is being extended to support working parents, especially single parents. The relief package also includes a one-time payment of €230 for students and trainees who receive state benefits. Around €272 million are provided for the "Catch-up after Corona for Children and Young People" action program in 2022.

The coalition agreement includes a commitment to build up to 100,000 publicly funded apartments each year, with a total of 14.5 billion euros provided for social housing in the coming years. The traffic light coalition decided in February 2022 on a relief package to provide for the premature abolition of the EEG surcharge from 1 July 2022 and doubled the planned heating cost subsidy for recipients of housing benefit.

Significant funds are being provided to mitigate the societal, social, and economic consequences of the pandemic, including financing citizen tests, medication, and protective masks, and stabilizing contributions to statutory health insurance. The federal program "Democracy Lives!" is being topped up by a further 15 million euros.

The coalition has also decided to increase the budget of the Foreign Office, with 2 billion euros earmarked for humanitarian aid and 485 million euros for crisis prevention, stabilization, peace promotion, and climate and security policy. The Federal Police is receiving 1,000 new positions. An additional 17.5 million euros is invested in strengthening measures for extremism prevention, supporting Jewish life in Germany, and addressing the concerns of minorities.

These investments underscore the government’s strategic focus on sustainable economic strength and social fairness, aiming to create a green, digital, and fair future for all Germans.

The science sector, including climate-change research, environmental-science, and research & development, will receive €34.8 billion in the 2026 budget, focusing on innovation, technological advances, and sustainable aviation.
Health-and-wellness, education-and-self-development, and general-news sectors receive substantial investments in the 2026 budget, as the government allocates funds for citizen tests, medication, protective masks, education, and childcare facilities.
The industry and finance sectors will also see growth due to investments in digitization, digital technology, and infrastructure, with a combined allocation of approximately €50 billion in 2026.
Environmental-science and climate-change initiatives are prioritized, with €21.7 billion allocated from the Climate and Transformation Fund for sustainability and green technologies during the 2026 fiscal year.
The climate-change and energy sectors are addressed in the budget, with an additional one billion euros provided for the climate-friendly construction of social housing, green transition funds, and the Bundeswehr special fund to ensure the best possible equipment of soldiers.
The crime-and-justice and politics sectors are addressed through increased defense spending, funding for humanitarian aid, crisis management, and food security in response to the Ukraine war, and investments in strengthening measures for extremism prevention and addressing the concerns of minorities.