Germany will borrow an additional €100bn next year, up by €18.2bn on previous estimates, in a sign of the huge strain the pandemic will continue to place on the public finances of Europe’s largest economy.

The additional borrowing, which comes on top of the €370bn of pandemic-related debt Germany has taken on since 2020, was contained in a draft budget for next year that was passed by Chancellor Angela Merkel’s cabinet on Wednesday. Ministers also passed the government’s medium-term financial plan out to 2025.

However, with Germany electing a new Bundestag in September, the spending plan will probably be subject to substantial changes.

Germany has enacted a plethora of stimulus measures and emergency aid programmes during the Covid-19 crisis and, in the process, has had to abandon its long-held commitment to balanced budgets. It has also suspended the “debt brake”, a strict limit on new borrowing that is inscribed in the German constitution.

The measure, which can be waived in the event of natural catastrophes or other emergencies, will have to be suspended for a third year running in 2022 to allow borrowing of €99.7bn.

But the finance ministry insisted on Wednesday that it will come back into force from 2023, as planned. It said the level of new net debt would decline to €5.4bn in 2023, before rising to €12bn in 2024 and €11.8bn in 2025 — levels which are allowed under the debt brake’s flexible rules.

The €370bn of pandemic borrowing has in part helped to fund an aid programme for companies hit by the lockdowns that is one of the most generous in the western world. The authorities have paid out more than €108bn so far: as part of that it has, since November last year, disbursed €25.8bn in direct, non-repayable grants to businesses.

Olaf Scholz, finance minister, defended the spending splurge, saying the government had “protected the health of many citizens, supported companies, preserved millions of jobs and protected Germany from a negative spiral”. He added: “That’s why we are continuing our spirited and decisive fiscal policy in the 2022 budget.”

Government experts forecast economic growth in Germany of 3.6 per cent for 2022, which Scholz attributed in part to the jolt delivered to the economy by a €130bn fiscal stimulus agreed last June. “The ka-boom worked and is still working,” he said.

Scholz also said that despite all the new borrowing, Germany’s debt-to-gross domestic product ratio is relatively low. In 2010, in the aftermath of the global financial crisis, it stood at 82.3 per cent, falling to below 60 per cent in 2019. This year it is expected to be 74.5 per cent, a level which Scholz said was the lowest among all G7 countries.

The draft budget envisages €51.8bn in investment spending that will in part go towards supporting the economic recovery — up from €38.1bn in the pre-crisis year of 2019. Public investments will remain on the level of €50bn a year out to 2025, under the government’s plan. The 2022 plan foresees spending of €443bn, down from €547.7bn in 2021.