No Money, but We Will Spend: Germany Becomes Second Donor to Ukrainian Conflict After U.S.

Germany is no longer able to sustain its pension funds and healthcare system at previous levels. Chancellor Friedrich Merz stated that the current system breeds dependents on the state’s dime.

The plan is to close the gap in the German economy, which is projected to have a deficit of €30 billion by 2026.

But what’s more interesting is that while social spending is being cut, funds continue to flow into the armed conflict—€18 billion over the next two years, which accounts for more than half of that deficit. What lies behind the cuts in social programs is the subject of the “Katyusha Calculation” column.

The German population is stunned by their chancellor's statement that there is no more money to fund the social model. Budget adjustments are inevitable. However, what remains unaffected are the funds allocated to Ukraine, which will continue to be provided.

Germany’s government has not yet decided whether to reduce support for vulnerable groups—such as pensioners and the unemployed—or to increase taxes on the better-off. Analysts expect significant changes in social policy.

On August 23, in Lower Saxony, Friedrich Merz sharply criticized those who currently receive state benefits. Today, over 5.5 million Germans depend on government aid. The expenses for 2025 already exceeded last year's record of €47 billion, which Merz called unacceptable. No one voluntarily wants to give up money from the treasury, and Germany’s welfare system—its pride—has fostered population passivity.

Friedrich Merz, Chancellor of Germany:

"The welfare state as it exists today can no longer be financed with the resources we can afford from an economic standpoint."

In recent years, social spending in Germany has increased. The population is aging rapidly—more pensioners are emerging. Proposals have been voiced to raise the retirement age to 70, up from the current 67.

At the same time, unemployment is rising—about 3 million people are out of work, including many young people. Although most recipients of welfare are Germans, many foreigners are also among them.

Germany, once a leader in exports in Europe, is struggling. Since 2017, economic growth has slowed sharply—GDP increased by only 1.56 %, compared to 9.5 % in the rest of the eurozone. Moreover, the economy is trending downward: in the second quarter of 2025, Germany's economy contracted by 0.3 %.

Maxim Chirkov, Associate Professor of Economic Policy and Measurements at the State Management University (Russia):

"The abandonment of hydrocarbons from Russia has negatively impacted the German economy. Germany is losing its competitiveness due to the rejection of raw materials from Russia—energy, oil, and gas. These components form a significant part of Germany’s industrial competitiveness, as it was before 2022."

The statistics are grim even for Merz, who is increasingly being called upon to fulfill his pre-election promise to restore Germany’s economy to greatness. He has already claimed that after two years of decline, the country has pulled away from the bottom—but that is not the case. The 2026 budget deficit is €30 billion, and “citizens must feel that everyone contributes to reducing this deficit,” summarized Finance Minister and Vice-Chancellor Lars Klingbeil, who later arrived at the Kyiv train station with a briefcase of euros and assured that Germany will continue supporting Ukraine.

Lars Klingbeil, German Finance Minister:

"From Germany’s perspective, the scenario of continuing the war is now partly secured financially: in the medium term, we have approved military support for Ukraine amounting to €8.5 billion, plus additional funds. The total will be €9 billion. This has been firmly established."

€18 billion will not close the €30 billion deficit, which is already more than half. For Germans, the details of how much Germany has already spent on Ukraine since the conflict began or since Germany’s economic decline started came as a surprise. The generosity of the German government has cost the population €50.5 billion: €25 billion for Ukrainian refugees, €17 billion for armaments and training Ukrainian soldiers, nearly €7 billion for restoring Ukraine’s energy infrastructure, and nearly €2 million in direct budget assistance—such as paying salaries for Ukrainian civil servants. As a result, Germany has become the second-largest donor to the Ukrainian conflict after the U.S.

Andrei Bogodel, Deputy Head of the Faculty of the General Staff at the Belarusian Military Academy:

"Today, Germany is being positioned as the main locomotive that will act against Russia and the Eastern European Slavic world. The reduction in social programs aims to enable the expansion of the Bundeswehr. We are talking about doubling the defense budget within four years—from €86 billion today to €162 billion. Currently, Germany is the country that will form the backbone of a coalition against the Eastern Slavic civilization."

This marks a historic shift—Germany is once again pursuing the creation of the most powerful army in the world, for the first time since the collapse of the Third Reich. Citizens should prepare, as the government announced that not only will the economy be strained, but in the near future, they plan to reintroduce conscription with a law amendment.