Key facts
- Germany's draft budget for 2027 allocates €109.7 billion (20%) to defense.
- By 2030, defense spending is projected to be nearly one-third of federal expenditure.
- The government aims to meet NATO's defense spending target of 5% of GDP.
- Germany relaxed its constitutional debt brake to facilitate increased military expenditure.
- The budget plan was presented ahead of a NATO summit.
Chancellor Friedrich Merz has placed Germany's rearmament at the forefront of government spending, with a draft budget approved by his cabinet allocating one in every five euros of federal expenditure in 2027 to defense. By the end of the decade, Germany's defense expenditure is projected to rise to account for nearly one-third of federal spending as the government races to meet NATO's defense spending target of 5 percent of gross domestic product.
"We cannot defend ourselves against Putin with a balanced budget," German Finance Minister Lars Klingbeil stated in Berlin on Monday while presenting the draft federal budget for 2027. "We must therefore make up for three decades in the shortest possible time, during which our military was cut back due to budget constraints."
For 2027, the government plans total expenditure of €555.4 billion, with €109.7 billion, or approximately 20 percent, dedicated to defense. This share is expected to grow, with €183.7 billion allocated to defense in 2030 out of a projected €635.4 billion total.
The 2027 spending plan was unveiled ahead of this week's NATO summit in Ankara, where European leaders are expected to demonstrate their commitment to increasing military spending and assuming greater responsibility for Europe's defense, in response to criticism from U.S. President Donald Trump.
Trump had previously posted on Truth Social that the United States spends more on NATO than any other country without receiving benefit, singling out Germany and calling its defense expenditure "Ridiculous!"
Merz responded the following day, stating, "Germany is doubling its defense budget within four years. This is the greatest effort we have ever made to strengthen our defense capabilities. In that regard, we have nothing to hide from anyone."
In 2025, Germany relaxed its constitutional debt brake, which limits the federal deficit to 0.35 percent of GDP, by exempting a significant portion of defense spending. However, public support for increased spending may waver in the coming years, especially as Klingbeil might need to implement cuts in other budget areas.
Klingbeil had previously warned that the 2027 budget would be "one of the biggest domestic policy challenges." The finance ministry managed to close a €34 billion gap in the 2027 budget without major controversy, partly by utilizing €7 billion from an €11 billion emergency reserve. Klingbeil justified this by citing "Trump's irresponsible war in Iran" and its economic impact on Germany.
However, projected budget shortfalls of €22.4 billion in 2028 and €38.8 billion in 2029 still loom. The 2027 draft budget requires approval from lawmakers in a vote anticipated in the fall.