The 2026 budget comes together with a medium-term financial framework until 2029, with the whole package expected to be approved by the cabinet on Wednesday.

The spending surge is part of the government’s plans to revive its lethargic economy, the only G7 economy that failed to grow for the last two years and which the government forecasts will stagnate this year.

The investment surge in 2026 and subsequent three years will be possible thanks to a special €500 billion infrastructure fund and an exemption from debt rules for defence spending approved in March.

The special fund for infrastructure, which is also excluded from Germany’s “debt brake” that limits borrowing to 0.35% of GDP, will add borrowing of €58.9 billion in 2026.

For defence, the €100 billion special fund created by former chancellor Olaf Scholz following Russia’s invasion of Ukraine, which will be exhausted in 2027, will add €25.5 billion in borrowing in 2026.

In the core budget, borrowing will go up from €33.3 billion in 2024 to €89.9 billion in 2026, the sources said.

Adding those three components, total borrowing in 2026 will be €174.3 billion.

The budget discussions will start in parliament at the end of September before its approval in both houses of parliament at the end of the year.