Weekly updates from the German Parliament (Bundestag)

The German federal government has unveiled its draft budget for 2023, with a focus on future investments, international responsibility, corona protection, social cohesion, and securing energy supply.

Future Investments and Infrastructure

The budget includes a significant EUR 500 billion Special Fund over 12 years for infrastructure projects, independent of the debt brake. This fund will allocate EUR 300 billion for national infrastructure, including transport, energy, healthcare, education, digitalization, and R&D. The Climate and Transformation Fund will receive EUR 100 billion to support renewables, hydrogen, climate-friendly industry, and building renovation. State-level infrastructure projects will receive EUR 100 billion, distributed according to population and tax revenue share.

International Responsibility / Defense Spending

Defense spending is relaxed from the debt brake above 1% of GDP to enable borrowing, reflecting a priority on military modernization. The draft includes about EUR 350 billion planned for military hardware over upcoming decades, including investments in combat vehicles, ammunition, aircraft and missile systems, and cyber systems. This builds on increasing defense budgets that aim to stabilize European security and meet NATO 2% GDP targets.

Corona Protection Measures

While no detailed budget numbers were found explicitly for corona protection, the general fiscal framework includes strong public health infrastructure investment within the EUR 300 billion infrastructure fund, which covers healthcare. Corona-related social programs and health measures are part of ongoing federal investment but specific allocations were not detailed in the sources.

Social Cohesion

The budget includes provisions that strengthen federal states’ finances by allowing deficits for targeted regional investments, which can reduce disparities and support local social projects. Investment in education, healthcare, and digitalization under the infrastructure fund supports social cohesion by improving access and quality of public services.

Securing Energy Supply

The Climate and Transformation Fund directly advances the energy transition by investing in renewable energy sources, hydrogen economy, and climate-friendly industry. This fund also supports building renovation for energy efficiency and infrastructure digitalization for energy management, critical for securing long-term energy supply.

In addition, the budget draft sets the course for a secure, affordable, and climate-neutral energy supply. Financial resources have been provided to diversify the energy supply, including 1.1 billion euros by 2026 for the leasing and operation of floating gas terminals.

The budget also addresses the importance of a stable, reliable, and solidarity-financed healthcare system, as demonstrated by the pandemic. The Act provides for further measures to combat the pandemic, including an extension of the legal basis for the Federal Ministry of Health's (BMG) corona vaccination and testing ordinances until December 31, 2022.

Germany will take on more responsibility and invest in its alliance and defense capabilities, with a special assets Bundeswehr in the amount of 100 billion euros initiated. Infection protection in care and integration facilities and companies is being strengthened.

The budget draft includes 50.1 billion euros for maintaining the necessary equipment for the Bundeswehr's security policy tasks. In 2023, Germany will invest around 8.5 billion euros in procurements for the Bundeswehr, with the Bundeswehr procurement acceleration law passed before the summer break allowing for quicker investment in the equipment of the Bundeswehr.

The federal government remains the second-largest donor nation behind the USA with over 22 billion euros in public expenditure for development cooperation (ODA expenditure). The vaccination authorization for pharmacists, dentists, and veterinarians will be extended until April 30, 2023.

Germany and its international partners in the EU and NATO are supporting Ukraine militarily, financially, diplomatically, and humanitarianly. Putin is using energy policy as a weapon, and Germany must become independent as soon as possible from Russian energy.

The budget draft also includes funds for humanitarian aid, with two billion euros available. Funds for promoting diversity, tolerance, and democracy will be increased to 200 million euros in 2023. Parental leave takes up the largest share, approximately two-thirds of the expenses, in the federal ministry of families' budget. Nationwide uniform measures, such as the obligation to wear masks in long-distance traffic, are planned.

The budget draft also includes provisions for a two-stage pandemic management by the federal states from October 1, 2022, to April 7, 2023. A deficit of 17 billion euros has built up in the statutory health insurance due to the pandemic and demographic change.

[1] Source: Bundesregierung (2022). Budget draft 2023 [2] Source: Bundesministerium der Finanzen (2022). Budget draft 2023 [3] Source: Bundeswehr (2022). Budget draft 2023 [4] Source: Bundesministerium für Gesundheit (2022). Covid-19 Protection Act [5] Source: Bundesregierung (2022). Press release: Infrastructure for the future

The draft budget for 2023, in the sphere of finance, allocates a substantial EUR 500 billion Special Fund over 12 years for various infrastructure projects, including healthcare, digitalization, and social cohesion projects, with a focus on renewable energy, hydrogen, and building renovation to address climate change.
In the realm of politics, the budget draft demonstrates Germany's commitment to international responsibility by increasing defense spending, relaxed from the debt brake, to modernize their military and meet NATO 2% GDP targets, while also providing humanitarian aid with EUR 2 billion available.