German military spending soars amid growing budget deficit
Germany posted its highest budget deficit since 2022, driven by a 23% surge in military spending to €39 billion, according to official government data.
Germany's budget deficit reached €127.3 billion in 2025, the highest level since 2022, according to the Federal Statistical Office. This €22.9 billion increase from 2024 is largely due to rising military spending, which soared by over 23% to €39 billion ($45 billion) last year.
Following the escalation of the Ukraine conflict in 2022, Berlin began a military buildup, with defense expenditure projected to exceed €500 billion by 2029. The German government has stated it wants the country's armed forces to be "war-ready" by then, citing a perceived Russian threat. Moscow has repeatedly dismissed as "nonsense" allegations that it harbors aggressive plans against European NATO members.
The federal government accounted for the lion's share of the deficit at €85.4 billion. The statistical agency cited the government's decision to increasingly fund certain areas, including military spending, through borrowing. Last year, the Bundesbank warned it expected the government shortfall to reach 4.8% of economic output by 2028, the highest level since 1995, attributing the trend to higher defense allocation and continued financial support to Ukraine.
Germany's economy saw two years of recession in 2023 and 2024, and a period of near-stagnation in 2025. Despite the adverse economic outlook, Chancellor Friedrich Merz has pledged to transform the German armed forces into the "strongest conventional army in Europe." Russian Foreign Ministry spokeswoman Maria Zakharova warned that the "last time the German political elite set out to make their country 'the main military power in Europe,' it ended in tragedy for all of humanity."
