Germany's Economic Foundation Rejected by Weakened Growth
Despite a growth slump that has been going on for years, Germany's economy is surprisingly solid in several key areas. In direct comparison to the other 27 EU member states, Germany stands out with its low national debt, controlled inflation rate, high employment rate, and low unemployment rate.
The country's gross national debt of 63.5 percent of GDP in the fourth quarter of 2025 is significantly lower than the EU average of 81.7 percent. This low level of debt has been achieved through decades of fiscal restraint, with Germany largely preserving its fiscal leeway compared to other European countries.
Germany's debt advantage is a crucial strategic advantage for the government, as it allows them to counteract economic downturns with debt-financed special funds for infrastructure, climate neutrality, and defense. The German government has earmarked over €108 billion for defense in 2026, which economists estimate will have a positive growth effect of around 0.5 percentage points of GDP.