Germany's defense sector is experiencing unprecedented growth, with defense spending projected to exceed €100 billion by 2027, marking a dramatic shift from decades of fiscal restraint. The expansion is fueling major contracts and industrial partnerships across the country.
- Defense spending projected to exceed €100 billion annually by 2027
- Rheinmetall AG secured €12 billion in new contracts since 2023
- Airbus Defence and Space awarded €7.8 billion Eurofighter modernization contract
- €23 billion in government funding allocated for defense from 2024–2026
- Bundeswehr to acquire 400 Leopard 2A8 tanks and 250 Eurodrone systems by 2030
- 25,000+ new high-tech jobs created in defense manufacturing
Germany’s defense industry is undergoing a transformative expansion, driven by a strategic pivot toward enhanced national and NATO security commitments. The federal government has committed to raising defense expenditures to 2% of GDP, a milestone previously unmet, with spending expected to surpass €100 billion annually by 2027—up from €50 billion in 2022. This surge reflects a broad reevaluation of military readiness in response to evolving geopolitical threats. Key industrial players are central to this transformation. Rheinmetall AG has secured over €12 billion in new contracts since 2023, including a €4.2 billion order for 155mm howitzers and ammunition production lines. Airbus Defence and Space has expanded its production capacity in Bremen and Manching, with a €7.8 billion contract for the Eurofighter Typhoon sustainment and modernization program. Additionally, Diehl Defence and MBDA Deutschland are benefiting from increased investment in guided missile systems, with combined orders exceeding €3.5 billion in the past 18 months. The government’s 'Funding Package for Defense and Security' has allocated €23 billion in direct funding between 2024 and 2026, with an additional €40 billion earmarked for procurement and infrastructure. This includes upgrades to armored vehicle fleets, cyber defense units, and drone integration across all branches of the Bundeswehr. The Bundeswehr’s modernization plan now includes 400 new Leopard 2A8 tanks, 180 Pandur EVO armored vehicles, and 250 Eurodrone systems by 2030. Market analysts note that this surge is reshaping Germany’s industrial landscape, creating over 25,000 new jobs in high-tech defense manufacturing. Foreign partners, including the United States, France, and Poland, are increasing joint development initiatives, with several multinational production facilities under discussion. The shift is also drawing attention from institutional investors, with the German defense sector’s market capitalization rising by 42% since early 2023.