Germany Unveils €130 Billion Investment Push to Revive Innovation and Defense

Berlin — Germany on Thursday announced a sweeping new investment initiative aimed at jump-starting innovation, modernizing industry and strengthening national security, as Europe’s largest economy struggles to regain momentum amid global competition and geopolitical uncertainty.

The plan, valued at up to €130 billion, is designed to channel private and public capital into strategic sectors ranging from advanced technology and energy infrastructure to defence and critical supply chains. Rather than operating as a conventional state fund, the initiative functions as a public-private investment platform, with the federal government providing guarantees and anchor capital to unlock much larger flows of private money.

At the center of the effort is a commitment by the German state to assume part of the financial risk that has often deterred investors from backing long-term or capital-intensive projects. Officials said roughly €30 billion in public backingwould be used to crowd in private investment, multiplying the impact several times over.

The program reflects a broader shift in economic thinking in Germany, where policymakers have grown increasingly concerned that underinvestment has left the country lagging behind the United States and China in key technologies. Years of cautious fiscal policy, combined with rising energy costs and slowing industrial output, have added urgency to calls for a more active state role.

A major focus of the initiative will be innovation financing, particularly for start-ups and fast-growing technology companies that struggle to secure late-stage funding in Europe. Artificial intelligence, climate technologies, advanced manufacturing and defence-related innovations are expected to feature prominently. The government hopes that by sharing risk with private investors, promising firms will be less likely to seek capital — or relocate — abroad.

Another pillar of the plan targets industrial transformation and energy security, with funding structures aimed at accelerating grid expansion, renewable energy projects and the decarbonisation of Germany’s manufacturing base. Officials have framed these investments as essential not only for climate goals, but also for preserving Germany’s position as a leading industrial power.

Defence and security have emerged as an explicit priority. Since Russia’s invasion of Ukraine, Berlin has moved to reassess long-standing assumptions about military spending and strategic autonomy. The new investment platform is intended to make defence-related projects more attractive to institutional investors, a notable shift in a market that has traditionally relied on direct government procurement.

The initiative will be coordinated in part through KfW, Germany’s state development bank, which will play a central role in structuring guarantees and co-investments alongside private funds.

Government officials described the program as a long-term economic reset, rather than a short-term stimulus. By lowering barriers to investment in strategic sectors, Berlin hopes to reverse years of weak capital spending and position Germany for a more competitive, security-focused era.

Whether the plan succeeds will depend largely on investor confidence — and on the government’s ability to deliver regulatory clarity and project pipelines quickly enough to turn ambition into deployed capital.