Germany's cabinet has approved a draft budget for 2025 and an economic framework for 2026 with record investments to revive the economy and a strong commitment to defense spending ahead of a key NATO summit.
To stimulate growth after Europe's biggest economy contracted for two consecutive years, the drafts include investments of 115.7 billion euros ($134 billion) in 2025 and 123.6 billion euros in 2026, up from 74.5 billion euros in 2024.
00:01Huge amounts of money is what we're talking about, but it's huge amounts of money that the German government will be borrowing.
00:06We now know where they intend to be spending that money that they're borrowing.
00:10It isn't uncontroversial for a government to be able to be looking to borrow as much as Friedrich Merz's is.
00:18Germany had constitutional systems put in place to stop this type of borrowing.
00:22Merz changed that, and it is an historic increase when it comes to defence spending.
00:28It's going to see the German government spend around $110 billion this year, and that will rise to $188 billion a year in spending by the end of this decade.
00:41Friedrich Merz, addressing the Bundestag, said that he wanted to see Europe's strongest conventional army, to see Germany have Europe's strongest conventional army.
00:51The reason he wants this is because he wants to see Germany have the strength to back up, being a rulemaker, being an order giver within NATO, but also away from NATO to show that European nations can provide a lot more defence without the United States, should that ever become necessary.
01:12Talking about the why to do it now, Friedrich Merz pointed to the current situations around the world conflicts in the Middle East, as well as that in Ukraine, involving Ukraine and Russia.
