Germany diverted over a third of defence-designated debt, Ifo says

By Maria Martinez

BERLIN, Sept 10 (Reuters) - More than a third of the additional debt taken on by the German government in 2025 under the exemption for defence and security-related spending was used for other purposes, according to an Ifo analysis published on Thursday.

"Instead, the spending leeway that became available in the core budget was used for other purposes,” said Ifo researcher Emilie Hoeslinger.

The finance ministry did not immediately respond to a request for comment from Reuters.

Government spending covered by the sectoral exemption totalled 54.6 billion euros ($63.56 billion) in 2024 and rose to 72.2 billion euros in 2025.

While spending increased by 17.6 billion euros, additional borrowing under the exemption amounted to 28.6 billion euros in 2025. According to Ifo, that left 11 billion euros in extra debt that did not translate into additional defence and security spending, implying a misappropriation rate of 38.5%.

The government has been repeatedly accused of using some of the financial firepower created by its taboo-busting fiscal reforms to prop up day-to-day spending.

In addition to defence spending, the sectoral exemption also covers aid to Ukraine, IT security, civil defence and civil protection of the population, and intelligence services.

($1 = 0.8590 euros)

(Reporting by Maria Martinez, Editing by Friederike Heine)