Defence spending will increase from 2.4 percent of gross domestic product this year, the sources said, as Europe's top economy takes steps to bolster its armed forces due to the growing threat from Russia and under pressure from US President Donald Trump.
"Germany's security is under threat," according to a budget planning document seen by AFP. "For the first time since the end of World War II, Germany and Europe must be in a position to guarantee their own security."
NATO is set to unveil its new target at a summit this week, under which allies promise to reach 3.5 percent on core military needs over the next decade.
The military alliance is also expected to set a 1.5 percent target for looser category of "defence-related" expenditures, such as infrastructure and cybersecurity.
Together, the spending aims will bring allies to the five-percent figure pushed for by Trump.
The military alliance's current target is for its 32 members to spend two percent of GDP on defence.
Under the German plans, set to be presented Tuesday as part of the national budget, 95 billion euros ($110 billion) will be spent on defence in 2025, including 62 billion from the normal budget, 24 billion from a special fund set up by the previous government and around nine billion allocated to support Ukraine.
It will then steadily increase to 3.5 percent of economic output by 2029, according to the sources.
The extra military outlays have been made possible after Chancellor Friedrich Merz pushed changes to Germany's strict "debt brake" through parliament that largely exempt defence spending from the rules.
He has vowed to build Europe's "strongest conventional army" to counter the growing threat from Moscow.
German defence spending has fallen heavily since the end of the Cold War and reunification, and the armed forces had suffered years of chronic underinvestment.
Berlin had already started ramping up defence investment since Russia's 2022 invasion of Ukraine but Trump's demands and concerns about the strength of US security guarantees have given the spending drive new impetus.
Parliament still needs to approve the new budget and will vote on it on September 19.
© Agence France-Presse
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