Germany is significantly boosting its defense spending, channeling funds into cutting-edge technologies like AI-powered systems and insect-sized surveillance devices as part of a sweeping military upgrade, Reuters reported.
The news agency spoke with over 20 figures from the defense sector—including tech investors, executives, and officials—to better understand how Germany plans to lead Europe’s rearmament.
Chancellor Friedrich Merz recently outlined a proposal to raise Germany’s defense budget to €153 billion ($180 billion) by 2029, up from €86 billion in 2025. He also committed to allocating 3.5% of the country’s GDP to defense spending under NATO’s updated security objectives, citing growing security concerns tied to Russia.
Russian President Vladimir Putin has dismissed these concerns, calling them unfounded and accusing NATO of exaggerating the Russian threat to expand its own military budgets.
According to sources familiar with the government’s strategy, Berlin sees AI, robotics, and startup innovation as crucial to modernizing its armed forces. A newly proposed procurement law is designed to fast-track the military’s access to emerging tech, with plans to adopt everything from autonomous underwater drones to robotic vehicles and bug-sized reconnaissance tools.
Startups like Helsing, an AI and drone development firm based in Munich, are becoming central players in Germany’s defense evolution—alongside major contractors such as Rheinmetall and Hensoldt.
However, critics warn that massive defense expenditures could deepen budgetary strains and further destabilize key sectors of Germany’s economy already struggling with rising energy prices, trade tensions, and the impact of sanctions targeting Russia.
