Final vote on record 2026 German budget due as 'big challenges' loom

German lawmakers are set for a final vote on the 2026 budget this week, with Finance Minister Lars Klingbeil warning that tougher negotiations await for the years ahead.

"The 2025 and 2026 budgets were a bit like a warm-up for us in parliament," Klingbeil said in the Bundestag, the country's lower house. "The big challenges are coming with the 2027 and 2028 budgets."

Klingbeil, the vice chancellor and leader of the centre-left Social Democrats (SPD), has warned that his draft financial plans for the years after 2026 include massive funding holes.

He is due to discuss potential solutions - such as cuts and tax rises - with Chancellor Friedrich Merz and Bavarian Premier Markus Söder later this year.

The conservative-led coalition carries the responsibility to resolve the issue, Klingbeil said.

In the meantime, the 2026 budget must still be passed in the Bundestag this week.

The proposals include more than €180 billion ($207 billion) in borrowing, more than at any time in German history other than during the coronavirus pandemic.

The total budget amounts to €524.5 billion, up €21.5 billion. The sum includes around €108 billion in military spending, the highest since the end of the Cold War.

Ukraine is to receive a record €11.5 billion for artillery, drones, military vehicles and other equipment for its defence against Russia.

Opposition parties have roundly criticized the budget, with the far-right Alternative for Germany (AfD) complaining of a "gigantic debt spiral," while left-wing groups warned of wasted investments and electoral give-aways.

"This coalition does not solve problems," said The Left's Dietmar Bartsch. "It is a problem for our country."