OR Germany plans to increase the basics defensive costs At 3.5% of Gross Domestic Product (GDP) in the next five years, as part of a mass increase in government investment in the army.
Increasing defense spending will help Germany achieve the new NATO alliance goal of binding at least 3.5% of GDP for defense from 2% today. An additional 1.5% will be required in Army -related costs to reach the 5% limit requested by US President Donald Trump – And which NATO members are going to support this week’s summit in The Hague.
“The government is facing the challenge to significantly enhance both domestic and allied capabilities and taking responsibility for Europe’s security,” according to a document distributed Monday (23.6.2025) by the government in Berlin.
The Government Coalition of Chancellor Friedrich Mertz from his conservatives and Social Democrats has pledged to reverse decades of subcutaneously in Germany’s armed forces to face the growing threat from Russia’s Russia.
They also launched a € 500 billion ($ 574 billion) investment program ($ 574 billion) in order to try to stimulate the stagnant economy.
The budget of Finance Minister Lars Clingbail for this year – which has been delayed due to the February national elections – is expected to be signed to the Cabinet tomorrow Tuesday (24.6.2025) before being sent to parliament for approval by legislators.
Includes Net new debt of 82 billion euroswhich will rise gradually to just over 126 billion euros in 2029according to the government. The Investments in the defense core will amount to € 95 billion this year. This includes € 62 billion from the regular budget, 24 billion euros from a debt -funded special fund created by the previous government and about € 9 billion to support Ukraine.
Mertz underlined his government’s determination to reinforce the Armed Forces in a speech in Berlin on Monday, while also stressing an issue that could delay the planned expansion.
“Money is not the decisive problem we have for Bundeswehr in the coming years,” he told an industrial forum. “The decisive problem is specialized staff,” he said, adding that the government could eventually be forced to restore some form of recruitment.
“The Bundeswehr must come back to the center of our society,” Merz said. It was wrong to suspend her in 2011 under his predecessor and his fellow conservative Angela Merkel, he added.
Bloomberg Economics’ Martin Ademmer expects that even by expanding the deficit and increasing the debt to GDP, Germany will remain in a “relatively comfortable fiscal situation”, with its debt marketing significantly lower than its partners in the US and the United States.
“Europe’s largest economy is unlikely to face fiscal problems,” Ademmer said in his note this month. Clingbail’s budget for 2025 is expected to receive the final approval from legislators in the upper parliament of Parliament in late September.