Germany's Bold Defence Spending Leap: A Strategic Shift

Germany is set to radically increase its defence spending, aiming to hit 3.5% of its GDP by 2029, a significant leap from the NATO-required 2% that it achieved for the first time in 2024. This move is designed to bolster its military capabilities amid a heightened security environment.

Following Russia's invasion of Ukraine, former Chancellor Olaf Scholz initiated a strategic shift with the 'Zeitenwende', a turning-point policy, introducing a 100-billion-euro special fund to modernize Germany's military forces. From 2025 to 2027, 77 billion euros will be allocated from this fund, which will be depleted by 2027.

To sustain the spending increase from 2028 onward, current Chancellor Friedrich Merz's administration has navigated constitutional debt regulations, allowing borrowing of up to 378.1 billion euros for defence. Annual spending will rise from 95 billion euros in 2025 to 162 billion euros by 2029, incorporating 9 billion euros annually for Ukraine support, accumulating to a total of 649 billion euros over five years.

(With inputs from agencies.)