Germany to raise defense spending to 3.5% of GDP in 2029

BERLIN (AP) — Germany’s finance minister on Tuesday vowed to lift the country’s defense spending to 3.5% of gross domestic product in 2029 as he presented the new government’s spending plans.

Chancellor Friedrich Merz’s coalition pushed plans through parliament to enable higher defense spending by loosening strict rules on incurring debt even before it took office last month. It acted ahead of the NATO summit starting Tuesday that aims to raise allies’ defense spending target from 2% of GDP to 3.5%, plus another 1.5% for potentially defense-related infrastructure.

Finance Minister Lars Klingbeil said Germany’s defense spending will hit 2.4% of GDP this year, and “we will raise defense spending step by step so that we will reach a NATO quota of 3.5% in 2029.”

Klingbeil, who is also the vice chancellor, said he will “be very vigilant that the money is spent efficiently,” for example by aiming for greater cooperation at European level on procurement, research and development.

Germany for years drew criticism for failing to hit the existing 2% spending target. But, shortly after Russia launched its full-scale invasion of Ukraine in 2022, then-Chancellor Olaf Scholz pledged to increase defense spending to 2%. He also announced the creation of a 100 billion-euro ($115-billion) special modernization fund.

Germany met the 2% target thanks to the fund, but it will be used up in 2027.

Merz has said that “the government will in the future provide all the financing the Bundeswehr needs to become the strongest conventional army in Europe.”

More broadly, the government’s plans call for overall government spending to increase from 503 billion euros this year to 573.8 billion euros in 2029. The new government is also setting up a 500 billion-euro fund to upgrade Germany’s infrastructure over the next 12 years.