The German cabinet approved the draft national budget for 2025 on Tuesday (June 24), paving the way for a significant increase in government spending. In March of this year, the German parliament approved amendments to the basic law, easing restrictions on government borrowing, which enables the German government to significantly increase spending in defense and infrastructure.

According to Finance Minister Lars Klingbeil, Germany will increase new debt substantially to repair aging infrastructure and respond to a sluggish economy. The draft budget anticipates that the defense budget will more than double by 2029 to 152.8 billion euros, amounting to 3.5% of Germany's GDP. The net borrowing for 2025 is expected to jump from 33.3 billion euros last year to 81.8 billion euros, with further increases projected for the next four years.

Why is the budget for 2025 decided now? Since the beginning of this year, the German government has been operating under a temporary budget due to the delay caused by the February elections. After the cabinet's approval, the budget has been submitted to the Bundestag, allowing legislators to discuss the bill before the summer recess.