Germany adopts short-term 2025 budget amid push for economic recovery

Germany’s upper house of parliament, the Bundesrat, has approved the country’s 2025 federal budget, giving the final green light to a plan worth hundreds of billions of euros.

The budget, already passed by the Bundestag last week, sets spending at about €502.5 billion ($594.8 billion), with nearly €82 billion in new debt in the core budget.

Additional billions are earmarked through special funds for the military and infrastructure projects.

It comes after a row over how to plug a massive spending gap torpedoed the previous government last November.

The plan covers only a few months. Because of an early federal election and the lengthy process of forming a new government, ministries have been operating under a provisional budget for around nine months, severely limiting their spending flexibility.

With the new budget in place, government departments now have planning certainty – though only until the end of the year.

Preparations for the 2026 budget are already underway, with initial debates held this week in the Bundestag.

Since taking office in May, Chancellor Friedrich Merz’s government has promised to focus on delivering growth for the crisis-hit German economy, which has seen two consecutive years of recession. A range of measures to boost competitiveness have already come into effect.

However, Germany faces “one of the most challenging phases” in its recent history amid global turmoil, Merz said earlier this week as he defended his government’s proposed next year’s budget in a major parliamentary debate.

“A winter, a spring, a summer and another autumn of reforms will follow,” Merz predicted.