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

Germany used roughly €11 billion of the €28.6 billion in additional borrowing recorded under its defense and security exemption in 2025 for purposes that the Ifo institute classified as non-defense. Ifo calculated that total exemption spending rose by €17.6 billion more than actual defense outlays, arguing that budget shifts diluted the intended military increase. The Finance Ministry disputes the methodology and says the expenditures comply with legal definitions, making the figures part of an accounting debate rather than proof of unlawful diversion; the disagreement matters because investors and allies are tracking whether exceptional debt produces real capability growth.