Germany is to increase defense spending by more than €5bn (£4.4bn) this year, Angela Merkel’s government informed Nato on Friday.
It is the biggest rise in the German military budget since the end of the Cold War, but will still leave the country far short of meeting Nato’s target of spending 2 per cent of GDP on defence.
The increase comes after months of US pressure for Germany and other European members to contribute more towards the cost of the alliance, and will be seen as a victory for Donald Trump.
But it remains to be seen whether Mr Trump will be satisfied with military spending that still only equates to 1.35 per cent of Germany’s GDP.
The rise also comes amid growing concern among Germany’s allies over equipment shortages and breakdowns that led the country’s own military watchdog to warn last year that it could not meet its Nato commitments.
Only four of the country’s 128 Eurofighters were said to be operational at one point last year, while all six of its submarines were out of commission at the end of 2017.
In 2014, shortages were so acute German soldiers taking part in a Nato exercise had to use broomsticks instead of guns.
Mrs Merkel’s government on Friday announced a defence budget of €47.32bn (£41.5bn) for this year, an increase of ten per cent compared to 2018.
It also promised a further increase to €49.67bn (£43.5bn) next year — the equivalent of 1.38 per cent of GDP.
But the figures still fall far short of Mrs Merkel’s pledge last year that Germany would meet the Nato 2 per cent spending target within the coming years.
They also fall short of the €12bn (£10.5bn) increase called for by Ursula von der Leyen, the defence minister — who warned that joint defence projects with European allies could be at risk without more spending.
Olaf Scholz, the finance minister, has been an opponent of increased defence spending and at one point was offering a rise of only €2bn (£1.7bn) next year.
That brought the government under fire from Hans-Peter Bartels, the German parliament’s military watchdog, who warned in March that the projected budget was not enough for “fully equipped” armed forces.
“The troops expect that the Nato pledge be reliably implemented,” Mr Bartels said.
The spending plans also came under fire from the outspoken US ambassador to Germany, Richard Grenell, who said in March they sent a “worrisome signal to Germany's 28 Nato allies”.
Increasingly, the issue has pitched Mrs Merkel’s Christian Democrat party (CDU), which favours higher defence spending, against its Social Democrat (SPD) coalition partners, who are opposed.
The figures announced on Friday represent a defeat for Mr Scholz and his SPD colleagues — the more so as they come less than a week after he called for government spending cuts.
Falling tax revenues amid the economic slowdown have left the Germany government facing a budget hole of €124bn over the next four years, and Mr Scholz has made it clear he is opposed to government borrowing to cover the shortfall.
The increase also represents a victory for Mr Trump’s policy of pressuring Nato’s European members to contribute more to the cost of their own defence.
While Mrs Merkel’s government will argue the new spending was prompted by military needs, it is unlikely it would have come without US pressure.
The UK is one of only seven Nato members currently to meet the alliance’s spending target of 2 percent of GDP.