Defense budget: Rising spending and persistent dissatisfaction – why is there still not enough money?

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Published on: August 18, 2025 / Updated on: August 18, 2025 – Author: Konrad Wolfenstein

Defense budget: Rising spending and persistent dissatisfaction – why is there still not enough money?

Defense budget: Rising spending and persistent dissatisfaction – Why is the money still not enough? – Image: Xpert.Digital

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In recent years, the defense budget in Germany and numerous NATO countries has increased significantly. Nevertheless, public and political dissatisfaction with the level of funding provided remains high. The discussion about defense spending and compliance with NATO's two percent target has long since shaped not only the budget debate but is also driven by strategic, security policy, and societal developments. A neutral person would ask the following questions in this context: Why are defense spending increasing? What is behind NATO's two percent target? Are the increasing funds sufficient? What problems remain unresolved? The following question-and-answer sections systematically examine these topics.

What is meant by the defense budget and how has it developed in Germany?

The defense budget is the portion of the federal budget allocated for the Bundeswehr's expenditures and Germany's military defense. It includes funds for operations, investments, material reimbursement, personnel, and research within the armed forces.

In Germany, the defense budget has remained relatively constant or increased only slightly for many years. In the 2021 fiscal year, it amounted to €46.93 billion. This represented an increase of approximately 2.8 percent compared to 2020. Funding was further increased in subsequent years, particularly in light of the changed security situation caused by the Russian attack on Ukraine and the increased demands from NATO. The defense budget for 2024 amounts to €51.95 billion, and €62.43 billion is planned for 2025 – not including the Bundeswehr special fund. Including the special fund, Bundeswehr spending will rise to €86.49 billion in 2025.

Why are defense spending increasing in Germany and other NATO countries?

The increase in defense spending is the result of various factors. After the Russian attack on Ukraine, it became clear that many European states needed to increase their defense capabilities. Germany, as part of its "Zeitenwende" policy, has committed to making its armed forces more efficient and more operationally ready.

Another reason for the increase is NATO's two percent target, which requires member states to spend at least two percent of their gross domestic product (GDP) on defense. This has been compounded by rising expectations within the alliance, particularly from the United States, which is demanding a greater contribution from its European partners. Countries such as Poland, Estonia, and the United Kingdom are even investing far beyond this figure. The German government announced for the first time in 2024 that it would meet the two percent target, spending around €90 billion on defense, equivalent to approximately 2.12 percent of GDP.

What exactly is the two percent target and why is it controversial?

The two percent target was agreed upon as a benchmark at the NATO summit in Wales in 2014. It was intended to ensure that all NATO members committed to a minimum level of defense spending. The agreement was originally worded in less binding terms – states were to "move toward the target." It was not until the summit in Vilnius in 2023 that the two percent mark was established as a binding lower limit.

The target is controversial primarily because it focuses solely on the level of spending, not on efficiency or actual security needs. Critics argue that the level alone does not provide any information about military capability or the prudent use of resources.

What is the composition of the defense budget and which areas benefit the most?

The defense budget is divided into four basic categories: operating expenditure, operating contracts for the further development of the Bundeswehr, investment expenditure, and supply expenditure.

In 2025, for example, significant funds are earmarked for military procurement. The largest single item is personnel expenditure, which will increase from €22.47 billion in 2024 to €23.89 billion in 2025. Funding for military procurement will jump from €15.2 billion in 2024 to €21.64 billion in 2025. This will benefit equipment such as ammunition, vehicles, aircraft, digitalization projects, and other systemically important areas. Funding for research and technology, on the other hand, will decrease slightly from €565 million to €500 million.

The structure of the defense budget has thus shifted, with investments in equipment and materiel taking center stage. At the same time, more than 10,000 military and 1,000 civilian posts are to be created.

What role do special funds and new financing instruments play?

After the outbreak of the war in Ukraine, a special fund was established for the Bundeswehr, initially with an initial amount of 100 billion euros. The German government plans to create additional special funds for defense and infrastructure in the coming years, in addition to the regular budget. Around 24 billion euros are expected to flow from the special fund by 2025.

In addition, the debt brake for defense and security spending was partially suspended in March 2025. Amounts exceeding the threshold of one percent of GDP may be financed by loans, thus falling outside the current budget regime. In the future, even a further special fund of up to €500 billion is planned for infrastructure projects.

These changes lead to significantly greater flexibility and raise questions about long-term sustainability and debt service, as the loans taken out must be serviced. €33.2 billion is budgeted for debt service in 2025 alone.

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Why does dissatisfaction persist despite increasing resources?

Despite the increased funding, dissatisfaction with the level of defense spending persists at both the political, military, and societal levels. Various causes have been cited:

1. Structural deficits and backlog

Many experts, relevant studies, and even representatives of the Bundeswehr argue that decades of neglect of the armed forces cannot be compensated for by a few years of increased spending. There is a lack of operational equipment, modern infrastructure, and strategic planning.

2. Efficiency and use of resources

Criticism is directed not only at the absolute amount, but above all at the efficiency of the use of funds. Procurement projects often take years, and bureaucracy slows down modernization.

3. Expectations and international comparisons

In international comparison, Germany has only recently reached the upper middle range of NATO spending. Countries like Poland and the USA are significantly higher in terms of defense investment. Moreover, pressure is now growing to raise the target from 2 percent to 3.5 or even 5 percent.

4. Internal and external challenges

The Bundeswehr faces complex challenges: from national and alliance defense to cyber defense and foreign missions. Many of these areas are underfunded, and constant budget adjustments fail to provide a sustainable solution.

What demands and reform proposals are there in the political debate?

In Germany and other NATO countries, calls for further increases in the defense budget are growing. Representatives of various parties and expert groups are discussing targets of three percent or more of GDP. For example, Green Party chancellor candidate Robert Habeck spoke at the beginning of the year of a target of 3.5 percent, which would correspond to a tripling of the defense budget. The CSU has set three percent as its target for the next ten years.

At the same time, there are political initiatives to detach defense and security financing from strict budgetary discipline. Reforming the debt brake and linking funding to the country's security needs are central elements of this debate.

What does the defense budget mean for the future of the armed forces and Germany's security?

A consistent increase and sustainable financing of the defense budget is a prerequisite for the Bundeswehr and other components of the German security architecture to reliably fulfill their missions. There is an acute need to catch up in the modernization of materiel, ammunition stockpiles, and infrastructure. The increased funding will enable the implementation of key projects, accelerate personnel growth, and fulfill alliance commitments. Last but not least, the increased budget sends a signal to international partners and represents the assumption of expanded responsibility within NATO.

However, numerous challenges remain: Effectiveness depends on how the funds are used, how quickly the reforms take effect, and whether Germany is prepared to make its contribution to international security with further increases.

Are there any remaining concerns about social support and sustainability?

Public support for increasing defense spending has traditionally been weaker in Germany than in other NATO countries. The debate surrounding social spending, infrastructure, and education investments competes with the need to expand defense systems. Financing through new debt is viewed critically by some experts and parts of the public, as the long-term costs and competition with other government functions must be considered.

Are there historical comparisons and international differences?

Historically, the federal government invested similar amounts of money in the reconstruction of the East after reunification as it does today – with lasting effects on the economy and society. The current special fund for defense and infrastructure is therefore not a new development, but rather a reflection of the changing global security situation.

Spending varies considerably among NATO countries: Poland invests over 4 percent of its GDP in defense, while the US spends around 3.4 percent. Estonia, Greece, the UK, and the US have long been the leaders, while countries like Luxembourg, Spain, and Belgium lag significantly behind. Only since the Russian attack on Ukraine has European investment behavior changed significantly.

What is the forecast for the coming years?

The medium-term financial planning envisages a further increase in funding. According to the Federal Ministry of Defense, budget line 14 is to increase from approximately €62.43 billion (2025) to €152.83 billion (2029). This would permanently enable the Bundeswehr to actively fulfill its obligations, tasks, and alliance commitments.

Further developments depend on the security situation, political decisions and the successful completion of current reforms.

What role does efficiency improvement play in the Bundeswehr?

It's not the size of the budget alone that determines defense capability, but how effectively the funds are invested in the structure, modernization, and operational readiness of the armed forces. Optimizations in procurement, digitalization, and personnel management are crucial in this regard. Dissatisfaction often arises when financial resources are increased but not used effectively or in a timely manner. For example, the Bundeswehr has repeatedly criticized lengthy and inefficient material management processes in recent years.

Defense budget between aspiration and reality

Although the defense budget has increased significantly in recent years and Germany has reached NATO's two percent target for the first time, there is persistent dissatisfaction with the level and effectiveness of the funds. The political and societal debate revolves equally around the need for further increases and the efficient use of the budget. While the federal government is massively increasing funding and establishing new financing instruments, the future viability of German defense remains tied to the implementation of sustainable reforms, modernization, and public support.

The coming years will show whether the reforms adopted and the budget increase will actually lead to a powerful, modern, and mission-oriented defense, or whether structural deficits and new challenges will further fuel ongoing dissatisfaction.

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