Germany will cut budget from $519bn to $485.7bn in 2024, but increase defence spending to $56.3bn

The day before, the German cabinet approved next year's draft budget. Berlin will cut spending by about 7%.

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The government's plan calls for a reduction in spending from €476.3bn ($519bn) to €445.7bn ($485.7bn) compared to 2023. At the same time, defense spending will increase by about €1.7 billion ($18.5 billion) to €51.8 billion ($56.3 billion).

Germany wants to reach the NATO standard of a defense budget of 2 percent of gross domestic product. For this purpose, a special fund of €100 billion ($108.7 billion) was created to finance modernization of the country's armed forces.

In 2024 Germany plans to allocate another €19.2 billion ($20.9 billion) from the special fund. That means total investments in the defense sector next year will reach €71bn ($77.2bn).

Subsidies for German companies will be cut by about 40% next year. While firms will be allocated €70 million ($76.11 million) in 2023, next year they will only be able to count on €48.7 million ($53 million).

Source: Bloomberg