This year's budget was supposed to have been signed off long ago, but the process stalled after the collapse last year of then-chancellor Olaf Scholz's ruling coalition amid furious rows over public spending.

Following February elections, conservative Chancellor Friedrich Merz took power pledging to ramp up spending on the armed forces and on infrastructure to fix crumbling roads and bridges.

The budget passed Thursday provides for 502.5 billion euros ($595 billion) in expenditure in 2025 -- some 25 billion euros more than the previous year.

New borrowing in Europe's top economy is forecast to be 81.8 billion euros -- higher than envisaged under the previous government's plans.

Speaking before MPs voted on the budget, Finance Minister Lars Klingbeil told parliament that the government "places absolute priority on ensuring that economic growth returns to Germany, that jobs here are secured".

"This is the most important issue for the people in this country," added the minister from the centre-left SPD party, the junior coalition partners to Merz's centre-right CDU/CSU bloc.

Germany's economy has been stuck in a long downturn but there is hope that increased public spending could boost growth, if combined with key structural reforms.

Without an official 2025 spending plan, the government had been operating under emergency budget measures that allow officials to cover existing obligations but not to take on new financial commitments.

The passage of the budget should open the way for the coalition to start ramping up spending in earnest.