Germany will increase bond issuance to provide funds for stimulating economic growth and defense plans.

Germany will borrow about one-fifth more funds than originally planned in the coming months to cope with the sharp increase in spending. At the same time, a tax reduction agreement totaling 46 billion euros also highlights the rising trend in Germany's borrowing needs. Increasing the bond issuance in the third quarter and the tax cuts are part of the measures taken by the ruling coalition led by Chancellor Friedrich Merz to revive the sluggish German economy and strengthen military construction. The German cabinet also approved this year's budget and the government's mid-term financial planning, which includes net borrowing of about 500 billion euros by the end of 2029. According to the latest plan announced on Tuesday, the German Finance Agency, responsible for managing federal debt, will raise 118.5 billion euros in funds from July to September, 190 billion euros more than the plan initially announced in December. German long-term government bonds fell, with the 30-year bond yield rising by as much as 10 basis points to 3.06%, the highest level since the end of May.