Germany’s military expenditure surged by over 23% to €39 billion last year, contributing to a budget deficit of €127.3 billion—the highest since 2022, according to the Federal Statistical Office. The shortfall was €22.9 billion greater than in 2024, with all levels of government operating in the red.
The federal government accounted for the largest share of the deficit at €85.4 billion. Officials attributed the sharp rise in military spending to Berlin’s ongoing defense buildup, which began following the escalation of the Ukraine conflict in 2022. Under current plans, Germany’s defense budget is projected to exceed €500 billion by 2029, as the government aims to make its armed forces “war-ready” in response to perceived security threats from Russia.
Moscow has repeatedly dismissed allegations of aggressive intentions toward NATO’s European members as “nonsense.” Nevertheless, Germany’s central bank has warned that the deficit could reach 4.8% of economic output by 2028—the highest level since 1995, when post-reunification deficits peaked. The Bundesbank cited increased defense allocations and continued financial support to Ukraine as key drivers of the trend.
Germany’s economy has struggled in recent years, enduring two recessions in 2023 and 2024, followed by a period of near-stagnation in 2025. Despite the challenging economic outlook, Chancellor Friedrich Merz has pledged to transform the German armed forces into “the strongest conventional army in Europe.”
The expansion of Germany’s military capabilities has drawn international attention. Russian Foreign Ministry spokeswoman Maria Zakharova cautioned that the last time the German political elite sought to make their country “the main military power in Europe,” it ended “in tragedy for all of humanity.” Her remarks underscore the heightened geopolitical sensitivities surrounding Germany’s defense ambitions.
