BERLIN (Realist English). Germany is preparing to dramatically expand its defence budget by more than two-thirds by 2029, overtaking France and the United Kingdom as Europe’s top military spender, according to draft budget plans seen by the Financial Times.
The proposed increase, driven by Chancellor Friedrich Merz, would see German defence spending rise from €95bn this year to €162bn in 2029. This includes an annual commitment of €8.5bn in military aid to Ukraine, underlining Berlin’s pivot toward long-term strategic rearmament in response to what it calls an “aggressive Russia” and an increasingly unpredictable United States.
The plans would raise Germany’s core defence expenditure to approximately 3.5% of GDP over the next four years, compared to an estimated 2.4% in 2025. The increase would put Germany ahead of both France and the UK in reaching NATO’s next-generation defence benchmark: a combined 5% of GDP, with 3.5% for direct military spending and 1.5% for infrastructure and cyber capabilities.
The new target, proposed by U.S. President Donald Trump, is expected to be endorsed by most NATO members at the upcoming alliance summit in The Hague.
France currently spends about 2% of its GDP on defence, with President Emmanuel Macron calling for a rise to 3–3.5% by 2030. In the UK, Prime Minister Sir Keir Starmer announced plans on Monday to meet the 5% target by 2035. However, Britain’s trajectory is slower, with defence spending projected to reach only 2.6% by 2027 and 3% after the next general election in 2029.
Germany’s ambitious military buildup is enabled by a major shift in fiscal policy. The Merz government recently amended the country’s constitutional debt brake to allow up to €1 trillion in borrowing over the next decade, earmarked for defence and infrastructure. A separate €100bn defence fund created in 2022 under former Chancellor Olaf Scholz will continue to support spending through 2026, with €24bn scheduled for disbursement in 2025.
The broader budget framework includes a 55% increase in infrastructure investment this year, totaling €115bn. This is partially financed by a €500bn, 12-year special fund designed to bypass constitutional borrowing limits. Of this, €11.7bn will go toward rail and transport development.
To stimulate growth, Berlin also plans a €46bn corporate tax relief package for the 2025–2029 term.
Germany has been operating without a formal 2025 budget since Scholz’s coalition collapsed in November over funding disputes. The Merz government now expects to pass both the 2025 and 2026 budgets by the end of September. Fiscal projections show the country’s budget deficit growing sharply — from €33bn in 2024 to €82bn this year, and rising further to €126bn by 2029.
Germany’s transformation from NATO’s defence laggard to Europe’s leading military spender reflects a historic pivot in Berlin’s posture — from postwar restraint to strategic assertiveness. While the economic risks of ballooning deficits and debt relaxation are real, the political signal is clear: in an unstable global order, Germany no longer assumes that American protection is guaranteed. Its bet is that military strength buys both security and sovereignty.
