At the end of the third quarter of 2025, public debt across the European Union reached 82.1 percent of GDP, according to the latest Eurostat data. In the eurozone, the figure was even higher, at 88.5 percent. That marks a slight increase compared with previous quarters, but it also confirms that after years of crises — the pandemic, the war in Ukraine, the energy crisis, and the Iran conflict — member states continue to accumulate debt. The most indebted remain the countries of southern Europe: Greece at 149.7 percent, Italy at 137.8 percent, France at 117.7 percent, Belgium at 107.1 percent, and Spain at 103.2 percent of GDP. At the opposite end of the spectrum sit Estonia (22.9 percent), Luxembourg (27.9 percent), Bulgaria (28.4 percent), and Denmark (29.7 percent).
Poland sits in the middle of the pack, with public debt currently still around 58 percent of GDP. Germany, the EU's largest economy, stands at roughly 63–66 percent, but it is precisely Germany's case that reveals the most interesting — and most alarming — trend of recent years.
In 2025, Germany decided for the first time in decades to circumvent the classic "Schuldenbremse" (debt brake) on a massive scale through special funds. The largest of these is a fund worth a staggering 500 billion euros for the military, introduced in March 2025 following a constitutional amendment. Its resources do not enter the regular federal budget and are not subject to debt limits. On top of that is the "Sondervermögen Bundeswehr" (100 billion euros for defense), which has existed since 2022 and was still being drawn down heavily in 2025.
In practice, this means that in 2025 Germany financed a significant share of its investments — in infrastructure, climate, and defense — outside the regular budget. The bond issuance plan for 2026 already reaches 512 billion euros — a record level. When demand at auctions weakens, a "market maintenance quota" is activated — the agency absorbs the remainder and reintroduces it to the market later. As a result, all auctions end successfully, and the yield on 10-year Bunds has risen to 2.89–2.92 percent — the highest in two years, yet still low compared with the United States (4.2 percent) or Italy (3.5 percent).
Germany is not an exception but rather the leader of a trend that spread across the entire Union in 2025. An increasing number of countries are resorting to off-budget mechanisms or escape clauses to finance spending outside the usual Maastricht rules and national debt brakes.
In Germany, the constitutional amendment of March 2025 exempted defense spending above 1 percent of GDP from the debt brake. France and other countries activated emergency clauses within the Stability and Growth Pact. At the EU level, the Next Generation EU recovery fund (worth nearly 800 billion euros) continues to operate, with its resources distributed outside the ordinary EU budget as well. As a result, in 2025 over a dozen EU countries — including Germany, France, Italy, and to a lesser extent Poland — financed a significant portion of their capital expenditures through special funds or additional debt issuance.
Critics — including the Bundesrechnungshof and numerous economic institutes — warn that while such arrangements allow for rapid investment, they create "shadow budgets" and hidden risk. Resources from the Sondervermögen often replace regular spending rather than supplement it, and in the future, when the funds run out, returning to a normal budget may mean either cuts or further tax increases.
