Future-Orientation of Core Budget Falls to a New Low

The 2027 federal budget was submitted to the Bundestag today. A key issue: How much is being invested in the future? The calculation of the ‘Future Ratio’ of the 2026 federal budget, published on the same day by ZEW Mannheim and WWF Germany, provides key insights regarding this question. According to the calculation, the federal government’s future-oriented expenditure reached a new high of 140.2 billion euros in the 2026 budget.

However, the rise in expenditure on future-oriented tasks such as education, nature conservation and climate action is almost entirely funded by special funds, whereas the proportion of future-oriented expenditure in the core budget has fallen to its lowest level since the start of the time series in 2018. As much as one in five euros of the federal government’s future-oriented spending in 2026 will be financed from the Special Fund for Infrastructure and Climate Neutrality. Since the other special funds are also more focused on future-orientation than the core budget, around 40% of all the federal government’s future-oriented expenditure comes from special funds of a temporary nature.

“The Future Ratio shows that additional financial leeway is, in principle, also being used for more future-oriented spending. At the same time, the future-orientation of the core budget has fallen to new low. As a result, the federal government’s future-oriented expenditure rests on shaky ground rather than a stable foundation. A sustainably higher level of future-orientation in Germany’s finances will only be achieved if future-oriented expenditure is once again more firmly anchored in the regular budget,” says Professor Friedrich Heinemann, head of the ZEW Research Unit “Corporate Taxation and Public Finance”.

Although the Future Ratio is at its highest level since 2018, its full potential has not yet been realised. Of the federal government’s net borrowing in 2026, only around 37% will be dedicated to financing future-oriented investments. While it is true that this figure is higher than in previous years (2025: 32%, 2024: 30%), it is important for the share of future-oriented expenditure to continue to grow in 2027, for example, to enable key investments in the refurbishment of the building stock and in nature-based climate action.

“Securing our future also means ensuring that all the necessary pillars are adequately funded. The Climate and Transformation Fund was already weakened by cuts in 2026. The current draft of the 2027 federal budget goes even further and provides for cuts in areas of key importance for the future, such as climate action, education and the promotion of democracy. Adequate and reliable investment, especially in these areas, is essential for a successful transition, a strong societal foundation and a high level of resilience,” says Heike Vesper, Chief Executive, Transformation and Policies at WWF Germany.

The analysis also highlights positive trends in budgetary management. In the Federal Ministry of Finance’s first monitoring report on the Special Fund for Infrastructure and Climate Neutrality, target- and performance-oriented budget management methods are applied. The WWF and ZEW regard this as an important step towards making the effectiveness of future-oriented public spending more transparent and improving its management. However, these methods should be further developed to ensure that climate- and nature-related aspects receive greater consideration.