The German government has been accused of implicitly cutting defense spending despite promising to increase and meet NATO's 2% GDP target.

According to official documents cited by Bild, Germany's defense budget will be reduced as soon as the influence of a special fund of 100 billion euros is excluded. Critics say the one-time fund is hiding cutbacks in day-to-day spending.

Lawmakers approved the creation of a fund of 100 billion euros to modernize the German armed forces. The money will be spent on upgrading obsolete German equipment and armaments. This move will enable Berlin to meet NATO's 2 percent target.

However, members of the Christian Democratic Union opposition accused Olaf Scholz's government of failing to increase the base defense budget and finance the higher costs associated with modernization.

Defense spending will increase from 46.9 billion euros in 2021 to 50.4 billion euros in 2022, excluding money from the fund, according to Bild, representing a jump of 7.5%. However, the report suggests that in 2026 it will fall again to 50.1 billion euros.

It is unclear whether Germany will meet NATO's target of 2% of GDP once money from a one-time €100bn fund is spent.

Carsten Brzeski, ING's chief economist in Germany, believes that there is a bit of a manipulation of the numbers and with the exception of the one-time fund, defense spending is slightly higher than in the 2021 budget, but in reality it will decrease.

Tensions within NATO have intensified in recent years as many European governments have failed to meet the military alliance's spending plan. However, many members, including the UK, have pledged to increase spending after the war in Ukraine.

NATO estimates that Germany's military spending has consistently been below the 2% GDP target, at just 1.5% in 2021 before the war.

Last year, defense spending was 2.3% of GDP in the UK and 3.5% in the US.