German Finance Minister Defends Increased Borrowing for Defense Spending

German Finance Minister Lars Klingbeil has defended the government's decision to increase borrowing in the 2027 federal budget, emphasizing the necessity of bolstering national defense capabilities in the face of Russian threats. "You cannot defend yourself against Putin with a 'black zero,'" Klingbeil stated during an ARD interview, referring to a balanced budget policy.

The proposed budget outlines a net borrowing of 118.7 billion euros for 2027, an increase from 98 billion euros in 2026. This borrowing, along with funds from special programs for infrastructure, climate neutrality, and defense, is expected to bring total new debt to over 200 billion euros in 2027. Klingbeil asserted that the budget adheres to constitutional debt limits, noting that defense and security spending is only subject to the debt brake up to one percent of GDP.

Klingbeil also addressed a 34 billion euro budget gap, which he stated has been closed. He defended the use of 6.8 billion euros from reserves, calling it a normal procedure. The minister acknowledged that the "Iran war" has slowed growth expectations, impacting current figures. Looking ahead, Klingbeil announced a more stringent austerity course starting in 2028, demanding an additional 2% savings from each ministry on top of an initial 1% requirement, stating, "We must consolidate; there is no way around it."