Germany sees firms moving abroad as defense budget rises

German companies continue to shift production and services abroad as operating costs rise, but the pace is slowing. Gardena plans to cut 250 jobs in Germany and relocate some staff to the Czech Republic, while BASF intends to move Indian‑based services out of its Berlin unit. Between 2021‑2023, about 1,300 German firms with more than 50 employees moved overseas, eliminating roughly 50,800 jobs. A KfW study shows SME activity abroad fell from 23 % to 20 % of the total.

At the same time, Germany approved its 2027 federal budget, raising defence spending by 33 % to nearly €110 billion and increasing overall borrowing. The plan cuts billions from a dedicated climate fund and slashes the development aid ministry’s budget by six percent. Finance Minister Lars Klingbeil justified the shift, saying, “Peace in Europe is threatened by Putin’s imperialist delusions like we have not seen for a long time.” Environmental groups criticised the move as an “attack on climate protection.” The budget comes amid weak growth forecasts driven by high energy prices and geopolitical tensions.