Defense spending: How to pay for Germany's security?

German military experts are warning that in the event of an attack on Germany, the country could only defend itself for a few days. Decades of fiscal austerity have left their mark on the country's army, the Bundeswehr, and now Germany's defense budget is a topic of debate ahead of the federal election on February 23, 2025.

How much money does the country need to maintain a well-equipped army? And where will it come from, given the billion-euro gaps in Germany's federal budget?

Chancellor Olaf Scholz of the center-left Social Democratic Party (SPD) believes the Bundeswehr is slowly getting back on its feet — thanks to his policies. Immediately after the Russian attack on Ukraine in February 2022, Scholz issued €100 billion ($103.8 bn) in additional funds to the Bundeswehr from a debt-financed special fund.

Scholz says the special fund has been "a great success" and wants to continue the course. On the campaign trail, he has been promising further military investment. However, since some other parties are making the same promise, Scholz is emphasizing that his party would not increase that funding by cutting social benefits.

So how much money will the Bundeswehr actually require in the coming years? In 2024, Germany's defense budget was just under €52 billion. Around €20 billion was added to that from the special fund. The government incurred additional expenses, such as military aid for Ukraine.

In total, Germany reported to NATO that it spent €90.6 billion on defense in 2024. With that, Germany achieved an important target: spending at least 2% of gross domestic product (GDP) on defense. In previous years, it had regularly failed to reach that target.

The German Minister of Defense, Boris Pistorius (SPD), says the special fund will be fully contractually-committed by the end of 2025. The monies will be paid out by the end of 2027 and will have been spent on: F-35A stealth fighter jets; combat helicopters; infantry fighting vehicles; maritime reconnaissance aircraft; frigates and Patriot missile defense systems — that is, on numerous expensive weapons systems.

Special funds are in high demand, not least because the Bundeswehr donated a great deal of equipment to Ukraine. Pistorius says the weapons-on-order should make the Bundeswehr "fit for war" again — and prevent Russia from attacking NATO territory.

2025: €80 billion for defense?

It is still unclear what will happen once the special fund has been fully allocated. That is likely to happen before the upcoming February 23 election. A budget for 2025 has not yet been approved, due to the coalition government collapse in November 2024. A total of €53.25 billion had been earmarked for the Bundeswehr in a draft budget — an increase of around €1.2 billion over 2024.

Defense Minister Pistorius had demanded much more, but was unable to convince the then cabinet. If Germany wishes to achieve 2% of GDP defense spending in the medium term, it will have to budget €28 to €30 billion more each year.

The conservative bloc of Christian Democratic Union (CDU) and Christian Social Union (CSU) agrees with these estimate. CDU/CSU chancellor candidate, Friedrich Merz spoke at Berlin's Federal Academy for Security Policy in early December, stressing that the Bundeswehr will need "at least €80 billion a year" in the future. He also said: "It will be a huge endeavor, and will not be possible without new budgetary priorities."

However, Merz does not want to finance that increase through new debt. Furthermore, he emphasized that his party sees "NATO's 2% target as a lower limit, not an upper limit."

While almost no-one in Germany shares US President Donald Trump's view that every NATO member must spend 5% of its economic output on defense, the Bundeswehr is playing a more prominent role in Germany's extremely short election campaign than usual. It seems as if the politicians are competing to announce the highest budget figure for defense.

Economy Minister Robert Habeck, the Green Party's top candidate, believes it is necessary to spend around 3.5% of GDP on defense over the next few years. According to the Greens' election manifesto, the funding should not come from the current budget, rather: "In the medium term also through higher borrowing."

During the Cold War era, Germany routinely spent a comparatively large amount of money on defense. On average, 3% of GDP was spent on tanks, fighter planes and a thick network of barracks.

In 1963, defense spending reached 4.9% of GDP. Given today's budget situation, that amount seems unrealistic. However, one thing is clear: a sticking point in coalition talks is certain to be how to finance the Bundeswehr.

This article was originally written in German.

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