[Financial News] President Lee Jae-myung said on the 2nd, “We must move beyond the outdated, binary debate over growth versus distribution and present a new growth formula suited to the changed times and circumstances.” The government plans to use next year’s budget, totaling 820.9 trillion won—up 12.8% from this year—to ease inequality and polarization and secure future growth engines. The president made the remarks during his address to the National Assembly that day on the government’s 2027 budget proposal, pointing to the limits of a “K-shaped economy” in which inequality and polarization are deepening. President Lee stressed, “We must make a sweeping shift from ‘growth for a few,’ in which opportunities and gains from growth are concentrated in certain regions, social classes and a small number of companies, to ‘growth for all,’ in which every region and all citizens share fairly in the opportunities and gains of growth.” He added, “We must build a fair country where not only Seoul and the capital region prosper, but regions outside the capital prosper as well, and where everyone has access not only to the fruits of growth but also to the opportunities it brings.” He also stressed that the recovery of the Korean economy must lead to improvements in the lives of individual citizens. While citing a 3.8% growth rate in the first half of the year and the possibility of annual exports reaching $1 trillion, President Lee said, “The shadow of inequality and polarization still hangs heavily over our society.” He added, “It is time for us to answer the desperate pleas of people who say the national economy may have improved, but their own household finances remain strained, and to confront this weighty question: What good is growth if my life does not get better?” President Lee presented the “Three Major Livelihood Projects,” comprising jobs, financial services for ordinary people and housing stability measures, as the first step in this shift. He explained that these policies “aim to go beyond the social safety net and provide a robust safety cushion with no blind spots, while firmly strengthening the foundations for sustainable growth.” He described next year’s budget as “a forward-looking budget that will make Korea an irreplaceable nation and a leading country, and a growth-spreading budget that will turn national growth into growth for the people.” He said additional tax revenue would be invested through the newly established Future Fund in four key areas: youth, future growth engines, regional development, and education and talent. Surplus funds would be used to bolster fiscal capacity if tax revenues fall short. The budget principles he set out included bold investment, preventing waste, prioritizing fiscal spending over tax expenditures, and favoring regions to achieve balanced national development. He said spending restructuring totaling 107.2 trillion won had been carried out across 6,476 programs, including the elimination of about 2,100 existing programs. On fiscal soundness, he said the managed fiscal balance as a share of gross domestic product (GDP) would improve from -3.9% this year to -0.1% next year, while the national debt ratio would fall from 51.6% to 48.3%. President Lee said, “We will issue government bonds, but almost all of the proceeds will be used to repay existing bonds, so there will be almost no net increase in government bonds.” In the area of livelihoods, the government will revamp the system so that people eligible for major social security benefits can receive them automatically without applying. The standard median income will rise by 6.7%, and the monthly livelihood benefit for a four-person household will increase to 2,218,000 won. The plan also includes providing newlyweds with a 1 million won marriage grant and offering up to 20 million won in child-rearing support upon childbirth. The Child Basic Allowance, which combines the child allowance and parental benefit, will provide a base payment of 200,000 won per month through age 12, rising to 300,000 won in designated priority regions. The youth budget has been set at 43.3 trillion won, a 53.5% increase from this year. The government will introduce an internship semester to give 60,000 university students their first work experience before graduation, and will allow any young person aged 19 to 34 to join the Youth Future Savings program without conditions. To support small business owners and the self-employed, it will issue 25.6 trillion won in Local Love Gift Certificates and 4.5 trillion won in Onnuri Gift Certificates. Investment to expand growth opportunities in regions outside the capital will also increase. President Lee said, “We will begin relocating 44 central government agencies from the capital region to Sejong in phases next year, and will finalize this year plans to move public institutions in the capital region to other regions and begin implementing them next year.” He also announced plans to invest 33 trillion won—more than double this year’s amount—in a major transformation of the country and locally led growth, and to fully cover tuition at 30 regional national universities. To secure future growth engines, the government will invest 21.3 trillion won in the “3 Major Mega-Projects” in semiconductors, physical AI and AI data centers, as well as in AI. It will provide 4.7 trillion won in focused support for frontier AI development and allocate 13.8 trillion won to the NEXT 10 strategic technology fields. The research and development (R&D) budget has been set at a record 39.5 trillion won. The defense budget has been set at 73.3 trillion won, an 8.2% increase. President Lee said, “To ensure robust self-defense, we will secure without delay powerful core capabilities, including the forces needed for an early transfer of wartime operational control, as well as nuclear-powered submarines and the KF-21. We will rapidly transform the armed forces into a smart, elite force by building an integrated manned-unmanned system based on AI, robotics and drones.” President Lee called on the National Assembly to cooperate, saying, “This is the time for the government and the National Assembly, and the ruling and opposition parties, to join forces for the future of the country and the lives of its people.” He added, “Implementation and speed are key,” and urged lawmakers to pass next year’s budget and related bills by the statutory deadline of Dec. 2. He added, “During deliberations, the government will listen with an open mind to views raised by both the ruling and opposition parties and actively incorporate better alternatives.” [email protected] Choi Jong-geun and Jiwon Song Reporter