BERLIN: More than a third of the additional debt Germany incurred in 2025 under a constitutional exemption for defence and security spending was effectively used for other purposes, according to an analysis by the Ifo Institute published Thursday.
Government spending covered by the sectoral exemption rose from €54.6 billion in 2024 to €72.2 billion in 2025, an increase of €17.6 billion.
However, additional borrowing under the exemption amounted to €28.6 billion in 2025. Ifo calculated that around €11 billion of this additional debt did not result in additional defence and security spending, equivalent to a 38.5% misappropriation rate.
Ifo researcher Emilie Hoeslinger said the additional fiscal room created in the core budget was instead used for other spending purposes.
How much defence-related borrowing was redirected?
According to the Ifo analysis, Germany increased spending under the exemption by €17.6 billion in 2025, while borrowing an additional €28.6 billion. The difference indicates that a significant portion of the new borrowing did not lead to corresponding increases in defence and security expenditure.
The findings add to criticism that Germany has been using the greater fiscal flexibility created by recent reforms to support regular government spending rather than directing all additional resources toward their stated purposes.
What spending is covered by the exemption?
The sectoral exemption extends beyond conventional defence spending. It also covers aid to Ukraine, IT security, civil defence, civil protection and intelligence services.
The German Finance Ministry had not immediately responded to a Reuters request for comment on the Ifo findings.
The figures come as Germany debates its 2027 federal budget and faces pressure to increase defence spending amid growing security concerns in Europe.