The CDU/CSU-SPD coalition is steering a roughly EUR 555 billion 2027 budget, centred on defence, infrastructure and state modernisation, through parliament with a vote due in November. The rise of the AfD and disputes over pension reform are straining the coalition.
Government · leader
Federal President Frank-Walter Steinmeier (Head of State); Chancellor Friedrich Merz, CDU (Head of Government)
Key national agenda
- Building up defence (core 2027 defence budget about EUR 109.7bn)
- Repairing bridges, roads and rail through the infrastructure and climate-neutrality special fund
- State modernisation: digital administration, less red tape, implementing the EU AI Act
- Restoring competitiveness with cheaper industrial power and grid-fee subsidies (2027-2029)
- Stabilising pension and health-insurance finances (including a sugary-drinks tax)
Government programmes
2027 federal budgetSpending about EUR 555.4bn
Net borrowing about EUR 118.7bn; including the special funds, new debt exceeds EUR 200bn. On 14 Oct the cabinet adopted its replies to the Bundesrat's comments
Infrastructure and climate-neutrality special fundEUR 500bn over 12 years
Investment in bridges, roads and rail; the opposition questions how much of it is genuinely additional
Defence budget increaseAbout EUR 109.7bn (2027)
The core 2027 defence budget rises by about a third on 2026, and the remaining Bundeswehr special fund is also drawn on
Federal grid-fee subsidy
Decided in Sep 2026; the industrial electricity price scheme has applied since May 2026
National action plan for climate-friendly shipping
Presented to and discussed by the cabinet on 14 Oct 2026
Business opportunities
AI tools and document-processing RPA for citizen services and reporting duties in local government
The state modernisation agenda puts fewer reporting duties and digital administration first.
State and municipal administrations, public IT service providers
AI video inspection and digital twins for bridges and rail assets
The special fund is paying for large-scale renovation of ageing bridges and rail.
DB InfraGO, Autobahn GmbH, state transport authorities
Energy monitoring and savings consulting for SME manufacturers
Energy-efficiency pressure persists even with the industrial power and grid-fee subsidies.
German Mittelstand manufacturers, local subsidiaries of Korean firms
Germany/EU market-entry consulting for Korean SMEs (certification, EU AI Act)
EU AI Act implementation and reshaped defence and manufacturing supply chains are driving demand for compliance support.
Korean SMEs and mid-sized firms entering Germany
Korean support schemes
- KOTRA Frankfurt · KOTRA — Supports German market research and buyer sourcing, and ran a K-content showcase in July 2026.
- 2026 K-Content Experience Hall in Germany · KOTRA — Two-day Frankfurt event in July 2026 that helped Korean webtoon and character firms enter the European market.
- Export Voucher program · MSS / MOTIE — Covers costs for CE certification, overseas market research and consulting.
Official notices
The Federal Government (Die Bundesregierung)
- 2026-10-14 62nd cabinet session: sugary-drinks tax added to the 2027 Budget Accompanying Act, climate-friendly shipping plan discussed, 23rd amendment to the Foreign Trade Ordinance adopted
- 2026-10-14 Key points on child and youth media protection discussed; nursing structure commission established
- 2026-10-07 Cabinet adopted a bill toughening penalties for digital violence such as deepfakes
Disaster · conflict · epidemic
Stable 2026-10-30
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