Germany approves defence money faster than it can spend it

Germany's 2027 budget is the first in which money is plainly not what limits the Bundeswehr. The draft that the cabinet approved on 6 July and that the Bundestag debated in first reading in September raises defence spending by almost a third, finances most of the increase with borrowing that the constitution now exempts from the debt brake, and assumes that the remaining half of the 2022 special fund will be spent within eighteen months. The harder question is whether the ministry can turn approvals into contracts, contracts into payments and payments into equipment at the speed the numbers imply. The record so far is better than it was, but still uneven.

What the draft contains

The finance ministry's draft plans total federal spending of €555.4bn in 2027, 5.9 per cent more than this year. The defence ministry's budget, Einzelplan 14, rises by 32.7 per cent to €109.7bn, the largest increase of any department and €16.4bn more than the previous medium-term plan had foreseen. The Bundestag's own summary gives €109.8bn, a rounding difference. On top of that, €29.9bn is to come from the Bundeswehr special fund, making €139.6bn in all, against €108.2bn in 2026.

According to the Bundestag's account of the first reading, military procurement accounts for more than €60bn of the total. Personnel costs come to €26.7bn, housing and running barracks to €19.3bn, and maintenance of existing equipment to €8.6bn, up from €7.7bn. The draft adds 6,000 military and 2,100 civilian posts. Separately, €11.6bn is earmarked for support to Ukraine. The new financial plan lifts Einzelplan 14 to €153.9bn in 2028, €169.9bn in 2029 and €183.7bn in 2030, the jump in 2028 reflecting the end of the special fund, whose spending is then absorbed into the regular budget. The government says this path reaches NATO's core target of 3.5 per cent of GDP in 2029.

How the exemption carries the cost

Since the constitutional amendment of March 2025, defence and certain security spending above 1 per cent of GDP is excluded from the debt brake. The 2027 draft uses that room heavily. Of €118.7bn in net borrowing in the core budget, only €33.4bn falls under the ordinary rule; €85.4bn is borrowed under the defence exemption. Including the special funds for the Bundeswehr and for infrastructure, total borrowing reaches €203.6bn. Interest payments rise by €11.6bn to €41.9bn.

Two features of the exemption matter for anyone reading the headline numbers. First, it covers the whole stock of qualifying spending above the threshold, not only the annual increase. The Bundesbank noted in February that the exemption allowed borrowing of almost €29bn in 2025, clearly more than the defence ministry's spending growth of just over €9bn. Excluding defence from the rule therefore also relieves pressure on the rest of the budget. Second, what counts as qualifying spending is partly a matter of classification. The Federal Court of Auditors warned in its assessment of the 2027 draft, as reported by The Pioneer, of a path into a debt trap and said the exemption makes the budget look substantially more investment-oriented than it is.

Finance Minister Lars Klingbeil has argued that there is no way to defend the country without new borrowing. The opposition parties disagree for different reasons: the AfD warned of rearmament on credit, the Left called the planned sums irresponsible, and the Greens attacked what they called unplanned procurement. The government's own figures point to the pressure ahead: even after closing a €34bn gap for 2027, the finance ministry still reports a shortfall of about €22bn for 2028.

Approvals, contracts and cash

Every procurement above €25m needs the approval of the Bundestag's budget committee. That gate is no longer the bottleneck. In 2025 the committee approved 103 such proposals worth about €83bn, a record; 30 of them, worth about €50bn, went through on one day in December. By 23 September 2026 the committee had approved 57 proposals this year. The ministry, according to reporting in August, planned about 150 for 2026 and up to 170 for 2027. That leaves around 90 to be pushed through in the final quarter, which suggests the approval calendar is still being set by the ministry's ability to prepare files, not by parliament.

Approval is also not payment. A contract signed this year typically commits funds over several budgets through commitment appropriations, and deliveries often begin two or more years later: the RCH 155 wheeled howitzer approved in December is due from 2028, and boats approved in September from 2029. The gap shows up in the outturn. In 2025 the core budget spent €7bn less than planned, €3bn of it in defence, and the special fund paid out €19.5bn against a plan of €24.1bn. The finance ministry blamed the provisional budget that ran until October 2025, which is fair as far as it goes, since departments could not start new commitments freely. The same explanation will not be available in 2027.

The acceleration law in force since 14 February 2026 is meant to shorten the front end of this chain. It runs to 2035, allows direct awards for Bundeswehr needs below the EU threshold of €443,000, suspends the obligation to split contracts into lots until 2030, lets buyers restrict bids to European suppliers and speeds up review procedures. These measures mainly help with smaller and medium contracts. They do little for the large platforms where most of the money sits and where delays are industrial rather than legal.

The special fund's last year

The €100bn fund created in 2022 was 97 per cent committed by the end of 2025. By 30 June 2026 about €50.7bn had actually been paid out, according to a government answer to a parliamentary question; the largest items were Arrow, Eurofighter, F-35, vehicles, ammunition and the land-forces digitalisation programme. The government intends to spend the fund fully by the end of 2027. That means paying roughly €49bn in eighteen months, compared with €19.5bn in the whole of 2025. It is possible, because most of the money is tied to contracts already signed, but it depends on suppliers delivering to schedule. If they do not, unspent sums will move into later years, and the 2027 figure will overstate what is actually spent.

Dietmar Bartsch of the Left, citing more than 47,000 defence contracts worth about €111bn in four years, has complained that the ministry cannot say how many projects have actually been completed and put into service. That is a criticism of reporting, not proof of waste, and it comes from an opponent of the spending. But the ministry has not published a measure of delivered capability that would answer it, which limits what parliament can check.

What the frigate says about value

The largest naval programme shows how announced capability can dissolve. In June the ministry ended the contract for six F126 frigates with Damen Naval, citing missed deadlines and costs. The project had been expected to cost about €10bn, with the first ship due in mid-2028; projections had risen to more than €18bn, and around €2.3bn already spent is largely to be written off. The ministry now plans eight MEKO A-200 frigates, the first four estimated at €6.3bn, with an option for four more at €5.3bn. The replacement may prove the better buy, but the episode is a reminder that a budget line measures intent. The Greens argued that the programme was stopped far too late.

What to watch before November

The budget committee's final session is scheduled for 12 November and the Bundestag vote for 27 November; the coalition has the votes. Three things will show whether the 2027 figures are credible. The first is whether the ministry submits most of the roughly 90 outstanding proposals this year or lets them slip into 2027. The second is the cash outflow of the special fund in the second half of 2026, which will indicate whether €29.9bn next year is realistic. The third is how much of the 2028 plan is already committed: if most of the €153.9bn is spoken for by existing contracts, the next government will inherit a defence budget with little room to change course. For allies, the useful measure is not the size of the German headline but the delivery dates attached to it.

Sources

• Bundesministerium der Finanzen — Bundeshaushalt 2027: Für ein starkes und krisenfestes Deutschland (6 July 2026)
• Deutscher Bundestag — Deutlicher Anstieg bei den Verteidigungsausgaben (first reading, 9 September 2026)
• Deutscher Bundestag, hib — Vorläufiger Haushaltsabschluss 2025 (28 January 2026)
• Deutsche Bundesbank — Monatsbericht Februar 2026: Öffentliche Finanzen
• ESUT — Entwurf Haushalt 2027: 555,4 Milliarden Euro Ausgaben (7 July 2026)
• ESUT — 12 Beschaffungsvorlagen für Munition, Waffensysteme und Dienstleistungen gebilligt (28 September 2026)
• bundeswehr-journal — Über das Sondervermögen für die Bundeswehr (6 August 2026)
• t-online — Verteidigungsministerium erklärt Aus für Fregatte F126 (24 June 2026)