Military Spending Surge Contributes to German Deficit

(SeaPRwire) –   Official statistics show that the budget deficit hit €127 billion last year, marking its highest level since 2022

Germany’s defense spending surged by more than 23% to €39 billion ($45 billion) last year, pushing the budget deficit to its highest point in four years, according to a report from the Federal Statistical Office.

After the Ukraine conflict escalated in 2022, Berlin launched a military buildup, with defense expenditure projected to exceed €500 billion by 2029. The German government has stated it aims to make the country’s armed forces “war-ready” by that time, citing a perceived threat from Russia.

Moscow has repeatedly dismissed as “nonsense” claims that it holds aggressive plans against NATO’s European member states.

In a press release issued on Tuesday, the Federal Statistical Office estimated Germany ran a deficit of €127.3 billion in 2025, with all levels of government operating in the red. The analysis notes the shortfall was €22.9 billion higher than in 2024.

The federal government accounted for the largest share of the deficit, totaling €85.4 billion.

Among the reasons for this trend, the agency cited the government’s decision to increasingly fund certain areas—including military spending—through borrowing.

Last year, Germany’s central bank warned it expects the government deficit to reach 4.8% of economic output by 2028, the highest level since 1995, when deficits peaked in the years following German reunification.

The Bundesbank attributed the trend to increased defense allocations and ongoing financial support for Ukraine, among other factors. Germany’s economy faced two years of recession in 2023 and 2024, followed by a period of near-stagnation in 2025.

Despite the challenging economic outlook, Chancellor Friedrich Merz has pledged to transform Germany’s armed forces into the “strongest conventional army in Europe.”

On Monday, 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.”