Berlin\u2019s public debt is on track to reach nearly 100% of GDP by 2040, government economic advisers have warned<\/p>\n
Germany\u2019s continued military buildup, financed largely through government borrowing, could push public debt to nearly 100% of GDP by 2040, an independent government advisory body has warned, urging Berlin to promptly rein in spending.
\nThe country\u2019s deeply ingrained cultural and political aversion to debt has been slipping under the weight of an eroding economy and rearmament program aimed at confronting the supposed threat from Russia.
\nGermany launched a \u20ac100 billion ($122 billion) military buildup and restructuring program in the wake of the escalation of the Ukraine conflict in 2022 under then-Chancellor Olaf Scholz. His successor, Friedrich Merz, has doubled down on this policy, vowing to turn the German military into Europe\u2019s strongest conventional force while maintaining military support for Kiev.
\n\u201cPublic finances in Germany are coming under growing pressure. In the federal budget, projected revenue will not be sufficient to cover the planned spending in the longer term,\u201d the German Council of Economic Experts (GCEE) warned in its annual report released on Wednesday.
\nAccording to the German Taxpayers Federation, the nation\u2019s debt burden is currently increasing by \u20ac7,052 per second, with every citizen being effectively \u20ac34,046 in debt on behalf of the state.<\/p>\n
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Although a debt-to-GDP ratio of 100% is not in itself fatal \u2013 the US currently sits at just over 125%, while Japan has long been above 200% \u2013 it is a much more troubling proposition for a Eurozone country. Because the members of the single-currency bloc share the euro, they are limited in the tools they can deploy to manage monetary policy or monetize their own debt independently of the wider monetary union.
\nFor the Eurozone itself, a more deeply indebted Germany removes an important buffer. Germany has historically maintained the financial space to act as the fiscal anchor during Europe\u2019s recurrent debt crises.
\nGerman Bunds also serve as the primary risk-free benchmark and safe asset for the entire Eurozone. Because other members price their debt against Bunds, any significant loss of fiscal discipline in Germany, with a resulting rise in Bund yields, could trigger instability across the whole bloc. At the very least, the baseline borrowing cost for every country in the Eurozone would come under upward pressure.
\nBerlin appears to be shying away from its traditional role as fiscal anchor. The government ignored warnings in late 2025 from the Bundesbank that Germany was on course to record its largest budget deficit since reunification by 2028. Merz\u2019s government amended the constitutional debt brake to fund the military buildup and passed a 2026 budget allocating a record \u20ac108.2 billion for defense and \u20ac11.5 billion in military aid for Ukraine.<\/p>\n
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The GCEE advises the government to gradually phase out the exemptions to the debt brake that have allowed for the debt-fueled rearmament drive.
\n\u201cAbove all, it is defense spending that is rising sharply and is financed by borrowing,\u201d a council member, Achim Truger, told AFP. \u201cFrom an economic point of view, it\u2019s simply not rational to finance defense spending of this scale permanently through debt.\u201d
\nMerz has so far refused to change course and has repeatedly reaffirmed his determination to continue the military buildup and provide funding for Ukraine despite what he himself called a \u201cstructural crisis\u201d in the German economy.
\n\u201cI will not deviate by a single millimeter from my fundamental conviction that, especially now, we must defend our freedom against Russia,\u201d he stated in September, advocating for increased military spending and continued aid to Kiev.
\nMoscow has consistently dismissed the notion that it poses a threat\u00a0to Europe as \u201cnonsense\u201d and believes the hostile rhetoric emanating from EU capitals is intended to distract populaces from mounting domestic problems.<\/p>\n","protected":false},"excerpt":{"rendered":"
Berlin\u2019s public debt is on track to reach nearly 100% of GDP by 2040, government economic advisers have warned Germany\u2019s continued military buildup, financed largely through government borrowing, could push…<\/p>\n","protected":false},"author":1,"featured_media":41080,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"rop_custom_images_group":[],"rop_custom_messages_group":[],"rop_publish_now":"initial","rop_publish_now_accounts":[],"rop_publish_now_history":[],"rop_publish_now_status":"pending","footnotes":""},"categories":[4,6,3],"tags":[],"class_list":["post-41079","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-economy","category-environment","category-politics"],"aioseo_notices":[],"aioseo_head":"\n\t\t\n\t\n\t\n\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t