Germany cannot defend itself without new debt, says finance minister

The investment push and economic reforms announced by the ruling coalition of Social Democrats and conservatives failed to win over voters in Sunday's election in the eastern state of Saxony-Anhalt, where the far-right Alternative for Germany (AfD) surged into first place. The election defeat to the anti-immigrant, pro-Russian AfD has reopened divisions in Chancellor Friedrich Merz's coalition government, as Klingbeil's centre-left SPD calls for planned economic and social reforms to be softened. "Especially at this time, we must be very clear: We will not accept racism or policies of exclusion. We will not accept the far-right dividing our country into 'us' and 'the others'," Klingbeil said. "We will not allow the systematic dismantling of our welfare state to be carried out under the banner of reform. The attacks on social rights and achievements must stop." Core defence spending will rise to €109 billion in 2027 from €82.2 billion in 2026, according to the draft budget passed in July. The total reaches €130.1 billion including support for Ukraine and other security spending. Germany was not investing in defence to wage war, said Klingbeil, but rather to ensure that its people do not have to experience one, adding that Russia's war did not stop at the borders of Ukraine. "We will not be intimidated by (Russian President Vladimir) Putin," Klingbeil said. The German government said last week that it had concluded that Russia was responsible for an attempted drone attack at Leipzig/Halle Airport. He also argued that the funds were helping to return Germany's anaemic economy to growth. Despite higher prices due to the Iran conflict and uncertainty caused by U.S. tariffs, the German economy has shown resilience and grew by 0.3% in the second quarter. Several economic institutes have upgraded their economic growth forecasts for 2026 and 2027, saying higher government spending drove a stronger-than-expected recovery in the first half of the year. "Trust does not arise because politicians tell people to be optimistic. Trust arises when things change," Klingbeil said. ($1 = 0.8613 euros) BERLIN, Sept 8 (Reuters) - Germany cannot defend itself without taking on new debt, Finance Minister Lars Klingbeil said on Tuesday, justifying rising defence spending amid growing threats. "It's like flying to the moon without a rocket," Klingbeil said, defending his 2027 draft budget in the lower house of parliament. Berlin is stepping up spending on defence and security amid pressure from U.S. President Donald Trump on NATO allies to contribute more and as authorities warn of growing cyber and hybrid threats from countries including Russia and Iran. Germany's cabinet approved the first draft in July, ramping up investment and defence spending to shield its sluggish economy from war-related energy shocks and years of underinvestment. From 2027 to 2030, Germany plans to borrow a total of €838.2 billion ($973.23 billion). Opposition to borrowing is deep-rooted in Germany, where the national psyche is still scarred by the experience of hyperinflation in the 1920s, but Klingbeil defended higher investments to make the country fitter for the future. "We are investing in our future, we are investing in our security, we are creating the freedom to remain capable of acting tomorrow," Klingbeil said. Total investment will rise to €117.5 billion in 2027 from €78.9 billion in 2025 under the previous government, helped by a €500 billion infrastructure fund and looser borrowing rules for defence. "Opponents of the special fund criticise this debt. These are the same people whose ideology meant infrastructure was neglected for years," Klingbeil said.

Germany cannot defend itself without new debt, says finance minister

Election setback and security concerns keep pressure on coalition

Finance minister defends higher borrowing for defence and infrastructure

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