Chancellor Friedrich Merz confident Germany will retain top credit rating despite record borrowing

Germany is about to borrow like it has never borrowed before. Chancellor Friedrich Merz, speaking after a cabinet retreat on August 26, said the country will hold onto its AAA sovereign credit rating even as the government charts a course toward more than €800 billion in additional debt by 2030. The confidence is not purely rhetorical. Major rating agencies, including Fitch, S&P, Moody’s, DBRS, Scope, and KBRA, all currently rate Germany at AAA with stable outlooks. Fitch reaffirmed that rating as recently as May 2026, citing the country’s strong governance framework and what analysts describe as meaningful fiscal flexibility. What is driving the borrowing surge The debt plan breaks into two large buckets. The first is defense: Germany has committed to lifting military spending to 3.5% of GDP by 2029. The second is a €500 billion infrastructure fund designed to repair and modernize public facilities that have been underfunded for decades. To make all of this legally possible, Berlin amended its constitutional debt brake, the so-called Schuldenbremse, which had long capped structural deficits at 0.35% of GDP. Borrowing costs have responded accordingly. Germany’s 10-year bond yie...