Germany is getting serious about defense, and the price tag is hard to ignore. The German federal cabinet has approved a draft 2027 budget that would lift core defense spending from €82 billion to roughly €109.8 billion, a 34% year-over-year jump that represents one of the most dramatic single-year increases in German military expenditure since the Cold War.
When you fold in Ukraine aid and other security-adjacent line items, total defense and security outlays climb to around €130.1 billion.
The numbers behind the pivot
Chancellor Friedrich Merz’s coalition government is not just bumping up defense budgets in isolation. The broader fiscal package includes a €500 billion infrastructure fund designed to modernize German assets and capabilities across multiple sectors.
Germany’s defense share of GDP is targeted at 3.1% in 2027, with an ambition to reach 3.5% by 2029. For context, NATO’s longstanding benchmark has been 2%, which most members spent years quietly ignoring.
