Germany plans to borrow approximately 20% more than initially projected in the upcoming months, to support a significant rise in expenditures.
It’s all part of Chancellor, Friedrich Merz’s strategy to rejuvenate the country’s sluggish economy and strengthen its military capabilities.
The cabinet has approved the annual budget and a mid-term financial plan as well, outlining around €500 billion in net new borrowing through 2029.
Under the changes, spending on defense alone will hit roughly €162 billion by 2029. The new plan is projected to raise defense spending to 3.5% GDP by 2029, six years earlier than originally predicted.
The increased borrowing also includes a €46 billion tax relief package.
