Berlin, June 24 (EFE).– German Vice-Chancellor and Finance Minister Lars Klingbeil presented on Tuesday the country’s draft budget for 2025, outlining historic public investments to boost defense capabilities and reignite growth in Europe’s economic power house.
The budget proposal includes total spending of €503 billion, with €115 billion, 22.8 percent of the total, earmarked for investments, a “record figure,” according to Klingbeil.
With this financial roadmap, Chancellor Friedrich Merz’s government aims to reverse two consecutive years of recession and simultaneously strengthen Germany’s military readiness.
Defense spending surges The draft budget allocates €62.4 billion to defense in 2025, equivalent to 2.4 percent of Germany’s GDP. This marks a significant increase from the €51.95 billion earmarked in the previous budget, and spending is expected to continue rising in the coming years.
“By 2029, we will gradually increase defense spending so that we reach NATO’s 3.5 percent target,” Klingbeil said.
Defense Minister Boris Pistorius welcomed the plans. “We have made a historic shift in defense spending.”
The defense ministry has benefited from constitutional reforms passed before the current legislature, which allow defense borrowing above the 1 percent GDP cap, along with the creation of a €500 billion infrastructure fund for the next 12 years.
According to Pistorius, the €62.4 billion in the regular defense budget will be supplemented by €24.4 billion from this special fund.
If parliament approves the proposal, Germany’s armed forces will have more than €86 billion in funding for 2025, including funds to hire 10,000 new soldiers this year.
Investing in modernization Klingbeil emphasized that the budget also aims to pull the country out of economic stagnation. Germany’s GDP contracted by 0.3 percent in 2023 and by 0.2 percent in 2024, with little to no growth forecast for 2025.
“Nothing is more costly than the stagnation of recent years. That’s why it’s right to invest more, to guarantee higher investments and solve the structural problems of the past,” Klingbeil said.
The government plans to direct millions toward modernizing infrastructure in transport, telecommunications, education, research, and climate protection. For 2025 alone, €22 billion will be invested in upgrading railway infrastructure.
“We will invest more than €100 billion in the rail network between now and 2029,” Klingbeil said. He acknowledged that past austerity policies aimed at producing budget surpluses had led to under-investment across critical sectors.
“Our country has faced cutbacks in many areas. The investment backlog is massive. Now we’re pushing forward. We want excavators rolling quickly, and our companies and workers will benefit,” he added. Klingbeil also pledged strict oversight to ensure “every euro is well spent.”
Opposition criticism Despite the boost in public investment, the draft budget includes a planned debt increase of €82 billion. Klingbeil defended this move, noting that Germany’s public debt remains relatively low at 63 percent of GDP, far below levels in countries like France or the United States, where public debt exceeds 100 percent.
However, the rising debt drew criticism from the far-right Alternative for Germany (AfD), the country’s main opposition party, which warned that public borrowing could reach €850 billion by 2029.
Meanwhile, the Green party accused the government of squandering a “historic opportunity” to tackle climate change and dismissed the budget as a “distribution of election gifts” and a “cover-up of budget holes.”
The Left party also condemned the “billion-euro military spending.” EFE
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