Germany needs to take on new debt to strengthen its defence and infrastructure, Finance Minister Lars Klingbeil said while defending the government’s 2027 budget. He argued that increased borrowing is necessary to address growing security threats and years of underinvestment. Germany plans to borrow €838.2 billion between 2027 and 2030, while total investment is expected to rise to €117.5 billion in 2027 from €78.9 billion in 2025.

Defence spending is set to increase significantly, with core defence expenditure projected at €109 billion in 2027, up from €82.2 billion in 2026. Including support for Ukraine and other security measures, total defence and security spending will reach €130.1 billion. Klingbeil said the increased spending is intended to protect Germany from potential conflict, amid concerns over Russia and growing cyber and hybrid threats.

The government’s spending plans face political challenges after the far-right Alternative for Germany (AfD) won a state election in Saxony-Anhalt, exposing divisions within the ruling coalition. Klingbeil also defended the investment programme as a way to revive Germany’s weak economy. The economy grew 0.3% in the second quarter, while several economic institutes have raised their growth forecasts for 2026 and 2027, citing stronger government spending.

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