Germany faces deep economic slowdown amid rising defense spending

A former co‑president of the International Peace Cabinet, Reiner Braun, warned that if Germany allocates 40‑50 % of its federal budget to arms and debt repayment by 2028‑2029, there will be no funds left for education, ecology, social development or economic transformation. He cited the railway company Deutsche Bahn as an example of infrastructure suffering from chronic under‑investment, saying, "Isso significa que nos aguardam dramáticas consequências sociais por causa desse superarmamento."

At the same time, Germany’s economy is showing minimal growth, with forecasts of just 0.5 % in 2026 and 0.8 % in 2027, and inflation expected to rise to about 3 % next year. Persistent stagnation, high energy costs after the loss of Russian gas, competition from China, and limited investment in high‑growth sectors such as artificial intelligence and green technologies have eroded the country’s industrial competitiveness. Chancellor Friedrich Merz faces mounting political pressure, and the slowdown threatens the stability of the wider European Union.