18 March 2022

Germany defence budget exceeds EUR50 billion

by Ana-Roxana Popescu

German defence budget: June 2021 vs second draft (Janes)

German Finance Minister Christian Linder presented his country's second draft budget for 2022 and Financial Plan 2022–26 to the federal cabinet on 16 March. The core allocation to defence increased by a nominal 7.3% compared to 2021, reaching EUR50.33 billion (USD56.8 billion).

Under Financial Plan 2022–26, military expenditure will remain at around EUR50.1 billion for the next four years, essentially eliminating the cuts that were initially forecast for 2023–25 in the previous finance plan released in June 2021. The core budget will remain constant in nominal terms but will slide from 1.32% of GDP in 2022 to 1.15% by 2026.

However, in his government statement to the Bundestag, Germany's parliament, on 27 February, Chancellor Olaf Scholz said Germany was moving towards spending 2% of GDP on defence. He also announced the federal budget for 2022 would implement a one-off special fund for defence worth EUR100 billion. On 16 March the federal cabinet approved draft legislation to incorporate the special fund into Basic Law, Germany's post-World War 2 constitution, meaning it is not subject to the debt brake balanced budget rule.

As such, the special fund is expected to make up the difference between the defence allocation and the 2% target. However, the EUR100 billion fund could only cover the difference with 2% in the first three years, leaving defence at the core EUR50.1 billion level from 2025 onwards. As such, until more details emerge, Janes will assume the fund is spread evenly over the five years of the financial plan, with EUR20 billion added to each year. This would bring defence spending to 1.85% of GDP in 2022, which would then drop to 1.6% by 2026.

https://www.janes.com/defence-news/news-detail/germany-defence-budget-exceeds-eur50-billion

German Finance Minister Christian Linder presented his country's second draft budget for 2022 and Fi...