Germany commits to tripling its defence budget and embracing next-gen tech

1. A Historic Pivot in German Defence Policy

Germany has announced an unprecedented plan to nearly triple its defence spending by 2029, marking a historic shift in its post-WWII security strategy. This move, framed within the concept of “Zeitenwende” (turning point), aims to raise annual defence expenditure from roughly €55 billion in 2021 to €162 billion, amounting to over 3.5% of its GDP—a level not seen in modern German history. This reorientation responds to rising geopolitical threats and pressures on NATO allies to take more ownership of European defence.

2. From Caution to Action: Why Now?

The catalyst for this shift has been Russia’s full-scale invasion of Ukraine in 2022, which shattered long-held assumptions about peace in Europe. German leaders realised that decades of underinvestment had left the Bundeswehr (armed forces) underprepared and dependent on external security guarantees. With American commitment to NATO under scrutiny, Germany is seeking to become a central pillar of European defence, embracing both hard power and tech-led deterrence.

3. Financing the Surge: Breaking the “Debt Brake”

To finance this leap, the German government is navigating constitutional and fiscal obstacles. The original €100 billion special defence fund introduced in 2022 is expected to be exhausted by 2027. A new legislative framework now allows up to €378 billion in additional borrowing dedicated to defence between 2025 and 2029. This effectively bypasses Germany’s strict “Schuldenbremse” (debt brake), sparking political debate over long-term sustainability and economic priorities.

4. Procurement Reform: Cutting Red Tape

Germany’s defence overhaul is not just about money—it’s also about speed and efficiency. For years, military procurement has been slowed by excessive bureaucracy and outdated processes. In 2025, Berlin passed a landmark procurement reform law to streamline acquisitions, lift tender thresholds, enable advance payments to startups, and simplify base construction regulations. These changes aim to ensure that the defence funds translate into real capability gains, not administrative bottlenecks.

5. A Tech-Forward Military: AI, Robotics & Biotech

Germany is placing next-generation technology at the heart of its military transformation. Investments are being directed towards AI-driven combat systems, autonomous drones, cyber capabilities, and even biotech. Notable examples include combat-ready robots from ARX Robotics, AI battlefield platforms by Helsing, and experimental surveillance projects using cyborg cockroaches and nano-drones. This shift marks a major pivot from traditional weapons to future-proof tech-driven warfare.

6. Integrating Startups into Defence

A significant innovation in Germany’s defence policy is the integration of tech startups into its procurement and innovation pipeline. Startups are being actively encouraged to co-develop military technologies alongside legacy defence firms such as Rheinmetall and Hensoldt. Government policies now allow advance payments, startup-friendly contracts, and domestic-only bidding, all designed to build a fast, flexible, and sovereign defence tech ecosystem that can respond to rapidly evolving threats.

7. Rebuilding the Bundeswehr’s Capabilities

Despite being Europe’s largest economy, Germany’s armed forces have faced criticism for poor readiness—from missing gear to outdated tanks. The new defence push includes revamping land forces, bolstering air and missile defence systems, expanding cyber units, and modernising the navy. Germany is also expanding its role in NATO’s eastern flank, deploying forces in Lithuania, and investing in rapid-response readiness as part of broader alliance obligations.

8. Economic Impact: Military Keynesianism?

Some analysts see Germany’s defence surge as a form of “military Keynesianism”—using defence investment to revitalize its economy. As the automotive sector slows due to EV transitions and global competition, defence manufacturing is poised to absorb industrial labor. Rheinmetall, for example, is converting automobile factories into ammunition production lines, while new defence hubs are expected to create hundreds of thousands of jobs in both heavy industry and high-tech sectors.

9. Strategic Independence & NATO Implications

Germany’s expanded defence posture signals a shift toward strategic autonomy within Europe. With uncertainties around U.S. elections and American NATO commitment, Berlin’s move strengthens the European pillar of NATO. It aligns with parallel efforts in France and Poland to ramp up military readiness. As Germany becomes the top European defence spender, its influence over EU security policy, defence technology standardisation, and strategic planning will likely increase.

10. Challenges & Future Outlook

Despite the momentum, Germany’s rearmament faces significant challenges. Political divisions over debt, legal hurdles, industry delivery delays, and potential public pushback over militarisation remain real concerns. Additionally, adversaries like Russia have condemned the militarisation, framing it as a destabilising force. However, if implemented effectively, Germany’s defence strategy could reshape the European security landscape, making the country not just an economic powerhouse—but a credible and technologically advanced military leader by the end of the decade.

Recommended Reads: