Germany will raise defence spending to 3.5% of economic output by 2029 funded through a nearly 400 billion euro borrowing programme, sources said on Monday, as Chancellor Friedrich Merz aims to send a strong signal ahead of this week's NATO summit.

Germany will boost defence spending by more than two-thirds by 2029, outpacing France and the UK as Chancellor Friedrich Merz drives a massive rearmament of Europe’s largest country in the face of an aggressive Russia and a volatile America.

Germany is planning to lift core defense spending to 3.5% of gross domestic product over the next five years as part of a massive increase in government investment in the military.