Germany sets path to lift defense spending to 3.5% of GDP by 2029

Germany’s government used the date of 2025-06-24 to set out a major increase in defense spending, with Finance Minister Lars Klingbeil saying Berlin would move from 2.4% of gross domestic product this year to 3.5% in 2029.

Klingbeil, who is also vice chancellor, presented the spending plans as Chancellor Friedrich Merz’s new coalition sought to align Germany with a higher NATO benchmark under discussion at the alliance’s summit. The NATO proposal cited in the plans would raise the core defense target from the long-standing 2% of GDP level to 3.5%, with a further 1.5% envisioned for infrastructure that could have defense relevance.

The announcement marked another step in Germany’s shift away from years of constrained military budgets. Before taking office the previous month, Merz’s coalition pushed measures through parliament to loosen strict limits on new borrowing so that defense spending could rise more quickly. The move followed criticism over many years that Germany had not met NATO’s existing 2% target.

Klingbeil said the increase would be phased in and tied to the new NATO quota. He also said he would watch closely to ensure the extra money was used effectively, pointing to greater European cooperation in procurement, research and development as one route to better value.

The planned increase comes after Germany temporarily reached the 2% level with the help of a special military modernization fund created under former Chancellor Olaf Scholz after Russia’s full-scale invasion of Ukraine in 2022. That fund, valued at 100 billion euros, was designed to help upgrade the Bundeswehr, but it is expected to be exhausted in 2027.

Merz has described a more expansive goal for the German armed forces, saying the government would provide the financing needed for the Bundeswehr to become the strongest conventional army in Europe. Politico reported that the government’s plans would raise defense spending to 153 billion euros in 2029, compared with 86 billion euros in 2025.

The broader budget plan also points to a larger role for public spending in the coming years. According to the Associated Press, overall government spending is planned to rise from 503 billion euros this year to 573.8 billion euros in 2029. The government is separately establishing a 500 billion-euro infrastructure fund to be spent over 12 years.

The German debate is taking place alongside wider NATO discussions about how much allies should devote to security after Russia’s war against Ukraine changed threat assessments across Europe. Politico reported that Merz told the Bundestag the spending increase was not intended as a favor to the United States, but as a response to Russia’s threat to the Euro-Atlantic area.

For Germany, the 2029 target would require sustained budgetary and political support beyond the current year’s plans. The government has presented the increase as both a national security measure and part of a collective NATO effort to raise allied readiness.