Germany’s defence budget is on track to match the combined total of the UK and France by the end of this decade, marking the biggest shift in European military balance since the post-war settlement. After loosening its constitutional debt brake, Berlin will allocate €779bn to defence between 2026 and 2030 — more than double the previous five years.
By 2030, Germany would surpass Nato’s 3.5%-of-GDP spending target — five years ahead of the 2035 deadline — with an annual defence budget approaching €190bn. Chancellor Friedrich Merz has framed the build-up as a response to Russia, US disengagement and the threat from Putin’s war in Ukraine, and has vowed to make the Bundeswehr (the German armed forces) “Europe’s largest conventional army” again. France, by comparison, spends €55bn on defence — covering its nuclear deterrent, submarines and fighter jets. Yet 80% of Germany’s planned spending is earmarked for legacy capabilities, with new defence tech capped at 5% of investment, according to the Kiel Institute.
Tensions are emerging. Paris worries Germany will lock in US procurement (F-35s, Patriot air defence) and grow Rheinmetall at the expense of European peers; the Franco-German FCAS fighter-jet programme is on life support amid disputes with Dassault Aviation. Berlin also plans €35bn for its own military satellites in competition with an EU initiative. Public opinion is split: ~75% of Germans back doubling defence spending, but 61% oppose Berlin taking a leading European military role. Source: Financial Times, 29 April 2026, Anne-Sylvaine Chassany and Leila Abboud.
Key numbers
Metric
Value
Germany defence spend 2026-2030
€779bn (more than 2× the prior 5y)
Germany 2030 annual defence budget
~€190bn (>3.5% of GDP)
France defence budget (current)
€55bn
Share of German plan on legacy capabilities
~80%
Share for new defence tech
≤5%
Why it matters
The historic taboo on German rearmament is gone. Chancellor Friedrich Merz frames it as a response to Russia, US disengagement under Trump, and Putin’s war in Ukraine, with the goal of making the Bundeswehr “Europe’s largest conventional army”.
But three structural tensions are emerging:
Procurement choices: With 80% of spending on legacy systems and only ≤5% on new tech, expect orders to flow to incumbents (Rheinmetall, Hensoldt, KNDS) and US suppliers (F-35, Patriot) — at the expense of French primes.
Industrial competition with France: The Franco-German FCAS fighter is on life support over Airbus-Dassault disputes. Germany’s €35bn military-satellite plan competes with an EU initiative.
Joint EU borrowing fight: France wants to broaden the €150bn SAFE fund into satellites and deep-strike; Merz refuses, fearing a CDU backlash and an AfD electoral boost.
Public opinion is split: ~75% back doubling defence spending, but 61% oppose Berlin taking the lead role. The Kiel Institute warns Germany may produce inertia rather than transformation — same structures, same bureaucracy, more money.
Takeaway
For European defence equities, the read is clear: incumbents win the next 3-5 years. The bigger question is whether the procurement spend strengthens European strategic autonomy — or simply locks in US dependence with a German label.
— Delfineo's Take
Germany’s €779bn five-year envelope is the single most important fiscal data-point for European defence equities. With 80% earmarked for legacy systems, the immediate beneficiaries are incumbents (Rheinmetall, Hensoldt, Renk, KNDS) rather than challengers. The sub-text is procurement nationalism: Berlin is buying mostly American (F-35, Patriot) and German, leaving Dassault, Thales and Leonardo with less Franco-European scale than Paris hoped. Useful anchor for any defence-name valuation work in Delfineo’s European industrial coverage.