On 1 July Germany's federal government approved the draft 2023 federal budget, as well as finance plan 2022−26 and the Bundeswehr special fund announced following Russia's invasion of Ukraine.
Military spending for the next four years reflects the benchmarks decided by the federal cabinet in March, having been revised upwards by only a few million euros. Core defence spending in 2023 will amount to EUR50.1 billion (USD55.4 billion), a 0.6% nominal decrease from 2022 but a EUR2.76 billion increase compared with the estimate in the finance plan approved in June 2021. The core allocation to defence is set to remain flat in nominal terms until 2026.
The biggest development concerns the expenditure plan for a EUR100 billion special fund to modernise the Bundeswehr announced in a landmark speech by Chancellor Olaf Scholz in February and approved by parliament in June. The fund is to be spent within five years and will count towards meeting Germany's NATO commitment of spending 2% of GDP on defence.
According to the draft budget document obtained by the Business Insider, no allocations from this fund are planned for 2022 but a total of EUR8.5 billion is earmarked for spending in 2023. Nearly 60% of that amount will go towards the Luftwaffe, with procurement receiving the largest share (EUR3.41 billion), followed by individual programmes such as the Future Combat Air System (EUR478 million). Other notable priorities include procuring more Puma infantry fighting vehicles (EUR304 million) and F126 frigates (EUR414 million).