Germany cannot ensure its own defense without taking on new debt, Finance Minister Lars Klingbeil said in Berlin on Tuesday. While defending the 2027 budget proposal in the lower house of parliament, the minister justified the need for increased spending amid rising threats by comparing the situation to “like flying to the Moon without a rocket.”
Berlin is ramping up defense and security spending due to pressure from the United States on NATO allies to increase their contributions, as well as official warnings regarding growing cyber and hybrid threats from countries such as Russia and Iran. In July, the government approved a budget draft that includes increased investment and defense spending to protect the economy from war‑related energy shocks and the consequences of years of underfunding.
Borrowing plans and economic priorities
Between 2027 and 2030, Germany plans to borrow a total of 838.2 billion euros (973.23 billion dollars). Despite deep‑seated opposition to government borrowing in German society—rooted in the historical experience of hyperinflation in the 1920s—Lars Klingbeil emphasized that these investments are necessary to make the country more future‑ready and maintain its capacity to act.
Total investment in 2027 will rise to 117.5 billion euros, up from 78.9 billion euros in 2025. This will be supported by a 500 billion euro infrastructure fund and a relaxation of borrowing rules for defense needs. The minister criticized opponents of the special fund, noting that their ideology led to years of infrastructure neglect.
Political challenges and security strategy
Investment and economic reforms announced by the ruling coalition of Social Democrats and conservatives failed to convince voters in Sunday’s election in the state of Saxony-Anhalt, where the far‑right party Alternative for Germany (AfD) took first place. The election defeat, in which the AfD campaigned on an anti‑immigration and pro‑Russian platform, has deepened divisions within the governing coalition of Chancellor Friedrich Merz. Against this backdrop, the Social Democratic Party of Germany (SPD) is calling for a softening of planned economic and social reforms. The minister emphasized that the government will not accept racism or exclusionary politics, nor will it allow the far‑right to divide the country into “us” and “the others”.
The minister also stated that he would not allow the systematic dismantling of the welfare state under the guise of reform, adding that attacks on social rights and achievements must stop.
Core defense spending in 2027 will rise to 109 billion euros, compared to 82.2 billion euros in 2026, while total security spending—including aid to Ukraine and other security‑related outlays—will reach 130.1 billion euros. Lars Klingbeil said Germany is investing in defense not to wage war, but to ensure its citizens do not have to experience it, adding that “Russia’s war does not stop at Ukraine’s borders.” Last week, the German government stated that Russia was behind an attempted drone attack on Leipzig/Halle airport. “We will not let Putin intimidate us,” the minister said.
The minister also noted that these funds are helping the German economy return to growth. Despite rising prices due to the conflict with Iran and uncertainty caused by U.S. tariffs, the German economy has shown resilience, growing by 0.3% in the second quarter. Several economic institutes have raised their growth forecasts for 2026 and 2027, noting that increased government spending contributed to a stronger‑than‑expected recovery in the first half of the year. “Trust does not come because politicians call on people to be optimistic. Trust comes when something changes,” the minister concluded.
Source: Reuters
