German auditors warn of ‘unlimited’ debt for defence

The German military is set to receive a huge boost in funding in the coming years – but the money must be spent wisely to avoid spiralling costs, the Federal Court of Audit said on Tuesday.

Berlin (dpa): The German military is set to receive a huge boost in funding in the coming years – but the money must be spent wisely to avoid spiralling costs, the Federal Court of Audit said on Tuesday.

In a special report, the Bonn-based agency warned that a “signal of unlimited willingness to incur debt” could lead prices in the defence industry to soar.

“Incentives for the industry to charge higher prices for the same services can now be expected due to the almost unlimited availability of financial resources and increased demand,” the office said.

Germany passed a landmark reform to strict constitutional rules on deficit spending in March, allowing the new government to boost military expenditure.

Chancellor Friedrich Merz is also pushing for a new target for NATO members to spend at least 3.5% of their gross domestic product (GDP) on defence, with an additional 1.5% on infrastructure.

The developments, linked to Russia’s ongoing war in Ukraine and a U.S. foreign policy shift under President Donald Trump, have led defence stocks in Germany to surge.

However, the auditors warned that “a permanent and solid financing of Germany’s defence capability is not guaranteed by a budget that is heavily financed by debt and therefore structurally unsustainable.”

The report also warned that the German military – known as the Bundeswehr – has become “top-heavy” and requires a greater number of regular soldiers.

While the Bundeswehr in 2024 had 60,000 fewer soldiers than in 2010, a decrease of 24%, the number of officers rose by 5%.