The German government has approved its draft budget for 2025, allowing for substantial increases in government spending, primarily motivated by military and infrastructure needs. This budget is a result of a law passed in March that eases debt limitations, enabling the government to accumulate additional debt to bolster a struggling economy and upgrade infrastructure. A key feature is the defense budget, projected to more than double, reflecting heightened security concerns stemming from Russia's aggressive actions. Net borrowing is also set to rise significantly over the next several years as spending priorities shift amidst political changes.
The expected budget hike was made possible by a law passed in March, easing Germany's so-called debt brake, enabling increased spending on defense and infrastructure.
Under Finance Minister Lars Klingbeil, the government plans to take on significant new debt, focusing on repairing infrastructure, stimulating the economy, and record military investments.
Defense spending is set to rise to 152.8 billion euros by 2029, driven by security concerns from Russia's invasion of Ukraine and pressure from the US.
Germany's net borrowing is projected to surge to 81.8 billion euros in 2025, a significant increase from 33.3 billion last year, continuing rising trends.
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