Berlin is preparing to significantly increase military spending – by 2029, the country's defense budget is expected to grow to 162 billion euros. This is twice the current level and significantly exceeds NATO's targets. Part of the funds will go to support Ukraine, while Germany itself is embarking on a large-scale modernization of its army. This is reported by UNN with reference to Bloomberg.
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As the publication notes, Germany's desire to rearm in response to growing Russian aggression in Europe will lead to its "annual defense budget doubling to 162 billion euros ($189 billion)."
According to a senior government official, this annual figure "should be reached by 2029, significantly ahead of the NATO alliance's target" for military spending, which is to reach 3.5% of gross domestic product by 2035. The total amount includes 9 billion euros per year for Ukraine to support its fight against Russia.
Given that defense spending currently accounts for 2% of GDP, the new figures highlight how much Chancellor Merz and Finance Minister Lars Klingbeil are stimulating rearmament.
This course, as indicated, means Germany's return to a military strategy similar to that of the Cold War. The publication notes that this is a reaction to ongoing Russian attacks against Ukraine and fears that US defense commitments to Europe have weakened during Donald Trump's presidency.
One of the main challenges for the government will be the effective use of additional defense funds – given production constraints, long queues, and delays in arms supplies. A special fund of 500 billion euros has also been created to modernize roads, railways, energy grids, and schools.
Among the planned procurements are up to 2,500 GTK Boxer armored vehicles and up to 1,000 Leopard 2 tanks. According to Bloomberg, such procurements could cost 25 billion euros.
The budget for next year provides for a net new debt of 89.9 billion euros, and by 2029 this figure will increase to 126.9 billion. At the same time, additional expenditures – including tax breaks and increased social benefits – have increased the budget deficit to 172 billion euros under the Ministry of Finance's medium-term plan for the next four years.
The government plans to reduce the deficit through financial consolidation and savings. The draft budget and financial plan are to be approved on Wednesday at a cabinet meeting. Then the documents will be considered by the lower house of parliament, and by the end of the year – by the upper house, where the 16 federal states are represented.