Germany's Defense Spending Surge: A Strategic Shift

Germany plans to increase defense spending to 3.5% of GDP by 2029, raising the budget from 95 billion euros in 2025 to 162 billion euros in 2029. This move is part of a strategic shift to enhance military capabilities. The budget increase is accompanied by significant borrowing approved under new regulations.

Germany is set to escalate its defense spending to 3.5% of its GDP by 2029, aiming to strengthen military capabilities ahead of the NATO summit in The Hague. The decision marks a significant boost, with the 2025 budget rising from 95 billion euros to a projected 162 billion euros by 2029.

This budgetary expansion will be accompanied by a rise in borrowing, as the draft anticipates an increase from 33.3 billion euros in 2024 to 126.1 billion euros by 2029. These numbers reflect Germany's strategic investment in defense, backed by recent debt brake reforms.

In addition to defense spending, a dedicated fund for infrastructure development will allow additional borrowing beyond the GDP borrowing limit, expected to reach 37.2 billion euros in 2025 and 57.9 billion euros in 2026, emphasizing Germany's commitment to overhaul its defense infrastructure.

(With inputs from agencies.)