German fiscal tracker – Infrastructure and defence spending heats up

Danske Research Team Danske Bank A/S

Fiscal easing in Germany has gained momentum in 2026, led by higher defence spending, public investment, and borrowing from the infrastructure fund. This has supported activity as seen by the decent manufacturing PMIs amid the energy shock and points to stronger economic growth in the second half of the year.

Combined, defence spending and public investment are up EUR 36bn (70% y/y), which is 1.6% of half-year GDP, reflecting an additional EUR 9bn in defence spending and EUR 27bn in investment compared to 2025H1. This is a significant easing of fiscal policy, showing that the stimulus is finally heating up in Germany.

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Danske Research Team

Danske Bank A/S

Research is part of Danske Bank Markets and operate as Danske Bank's research department. The department monitors financial markets and economic trends of relevance to Danske Bank Markets and its clients.

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