Increased financing will be allocated to Berlin's state budget
The proposed double budget for Berlin in 2026 and 2027 significantly increases overall expenditures, with personnel costs and social spending rising markedly. The state plans to spend approximately €43.8 billion in 2026 and €44.6 billion in 2027, up from less than €40 billion in 2025.
Financing the Budget
To finance the budget, Berlin intends to take on significantly more new debt than in prior years, enabled by a recent nationwide reform of the debt brake. The Senate draft plans loans totaling about €3.9 billion for 2026 and €3.8 billion for 2027. Additionally, since refugee costs may require roughly €1 billion more debt annually, the total borrowing could approach €5 billion per year.
Besides new loans and tapping into last reserves, Berlin will also use funds from the federal government’s "future investments" special fund, contributing €333 million in 2026 and €437 million in 2027. Districts will receive around €50 million per year from this source, with their annual transfers rising to €9.5 billion in 2026 and €9.6 billion in 2027 (up from €8.8 billion in 2025).
Priorities and Investments
Investments will be made in public transportation, bridge and road construction, housing construction, digitization, and modernizing the equipment of the police and fire department. The Senate Department for Urban Development and Housing's budget is notably doubled. Universities and cultural institutions will receive so-called transformation allowances of 20 million euros each.
School construction and climate protection, with the conversion of heat supply away from coal and gas, are further priorities. The largest portion of the budget is personnel costs, which will amount to more than 13 billion euros in each of the next two years.
Addressing Financial Challenges
The city of Berlin is in an extremely tense financial situation, with the costs for accommodation, supply, and integration of refugees having almost doubled between 2022 and 2025 to 2.24 billion euros. The current Berlin debt is around 68 billion euros, and in 2027, the city could likely spend around 1.6 billion euros per year just on interest.
The budget plan aims to invest strategically and moderately consolidate further. No personnel cuts are expected, and the districts will receive more money. The federal government is urged to initiate reforms and relief measures for states and municipalities due to massive expenditure obligations.
Political Reactions
The black-red coalition has significantly increased the budget after the austerity budget of 2025. However, the chairman of the Green faction, Werner Graf, criticizes that the budget plan does not do justice to Berlin as a social city and neglects climate protection. The Left faction calls the black-red budget policy "chaotic".
The budget draft goes to the House of Representatives for final decision by the end of December.
[1] Source: Berlin Senate Department for Finance [2] Source: Berlin Senate Department for Urban Development and Housing [3] Source: Berlin Senate Department for Education, Youth and Family Affairs
- The increased budget for Berlin in 2026 and 2027, given the significant rise in expenditures, is linked to the finance sector as the city intends to borrow approximately €5 billion annually to finance the budget, with funds from the federal government's "future investments" special fund also being utilized.
- The political landscape is significantly affected by the proposed budget, with the black-red coalition facing criticism from the Green and Left factions for increasing the budget, the former asserting that the plan neglects climate protection, and the latter labeling the black-red budget policy as "chaotic." Furthermore, the general news is abuzz with discussions surrounding the financial challenges Berlin faces, particularly with regards to its debt and refugee costs, and the necessity for reforms and relief measures from the federal government.
