Posted By Global Banking and Finance Review
Posted on June 23, 2025
By Maria Martinez
BERLIN (Reuters) -Germany will boost defence spending to 3.5% of gross domestic product by 2029, sources said on Monday, aiming to send a strong signal with its 2025 budget ahead of this week's NATO summit in The Hague.
Germany's total defence spending will go up from 95 billion euros ($108.89 billion) in the draft budget for 2025 to 162 billion euros in the budget framework for 2029, the sources said.
The draft budget for 2025 and the budget framework for 2026 will be approved by the cabinet on Tuesday with record investments of 115.7 billion euros in 2025 and 123.6 billion euros in 2026, up from 74.5 billion euros in 2024.
Borrowing will go up in the budget from 33.3 billion euros in 2024 to 126.1 billion euros in 2029, the sources said.
Germany will be able to borrow a total 378.1 billion euros for defence between 2025 and 2029 thanks to debt brake reform from March.
A special fund for infrastructure, which is excluded from Germany's debt brake that limits borrowing to 0.35% of GDP, will add borrowing of 37.2 billion euros in 2025 and 57.9 billion euros in 2026.
($1 = 0.8724 euros)
(Reporting by Maria Martinez, Holger Hansen and Christian Kraemer; editing by Matthias Williams)