Germany is set to cut spending on ammunition — a blow to Rheinmetall
Bloomberg reports this.
The draft budget for 2027, which the government may still amend, allocates €9.6 billion for the procurement of ammunition in 2027 — down from €11 billion in 2026, according to a document seen by Bloomberg. At the same time, Germany’s total defence spending is set to rise significantly by 2030.
In 2026, Rheinmetall’s shares lost more than 30 per cent of their value. The company, which traditionally specialises in tanks and artillery, is losing investor attention to manufacturers of drones and other modern military technologies, the effectiveness of which has been demonstrated by the wars in Ukraine and Iran.
The draft budget document, which is already circulating amongst traders and hedge funds, adds to the uncertainty surrounding the prospects of traditional defence companies, even giants such as Rheinmetall, with a market capitalisation of €49 billion.
Investors fear that defence companies’ profits are not growing fast enough to justify the high valuations that have emerged against the backdrop of Europe’s pledges to increase defence spending. Prior to Russia’s full-scale invasion of Ukraine in February 2022, Rheinmetall’s market capitalisation stood at just €4.2 billion.
According to the draft budget for 2027, €7.7 billion is earmarked for the direct procurement of ammunition, with a further €1.9 billion to come from a special defence fund.
Despite a reduction from 2026 onwards, this is still more than in 2025, when Germany had only just begun to invest actively in strengthening its defence capabilities and spent less than €4 billion on ammunition.
A spokeswoman for the German Ministry of Defence stated that she could not comment on individual budget items until the federal financial plan had been finalised. At the same time, she emphasised that the procurement of ammunition had been and would remain a priority.
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