Germany’s government moved to significantly expand defense spending after a series of Russian aerial incursions near NATO’s eastern borders, with Finance Minister Lars Klingbeil telling lawmakers that the 2026 budget for the armed forces will surge to €108 billion as Berlin strengthens “deterrence and defense capability” against a rising Kremlin threat.

Russian Incursions And NATO Alarm

Presenting the draft budget in Berlin, Klingbeil said, “NATO’s airspace is being breached not 600 kilometers from here,” citing recent intrusions into Polish, Romanian and Estonian territory. “Putin is testing NATO… Nobody believes that this happened by accident,” he added, framing the threat environment that underpins the spending push.

Record Outlays And How Berlin Will Pay

Defense expenditures will rise to a post–Cold War high of €108 billion in 2026, including about €26 billion drawn from the special debt-financed fund established under the previous government. To finance wider investment in defense and infrastructure, net new borrowing is projected to climb to almost €175 billion next year. Germany will also expand debt sales by roughly a fifth in Q4 versus its original plan. “We’re ending the years-long policy of belt-tightening for the Bundeswehr,” Klingbeil said.

Political Commitments And Fiscal Constraints

The ruling coalition of Chancellor Friedrich Merz’s conservatives and Klingbeil’s SPD has effectively shielded military spending from constitutional debt-brake limits, pledging to build Europe’s strongest conventional army and to remain a “reliable NATO partner.” Looking ahead, Klingbeil flagged “enormous challenges” for the 2027 budget, estimating a financing gap of about €30 billion. While he said nothing should be ruled out to close it—including potential tax increases—the coalition agreement contains a clause that precludes such a move, Merz’s allies noted.

Strategic Warning To 2029

Klingbeil issued one of Berlin’s starkest assessments yet, saying it is “widely expected” Russia could be in a position to attack NATO territory by 2029. “That doesn’t mean that he’ll do it, but it does mean that he can,” he told parliament—underscoring why the government argues the military expansion is urgent rather than optional.