A finance ministry source told Reuters military spending could rise by €2.1bn over a previous plan for 2020, boosting the share of defence spending to 1.37% of GDP, from 1.25% last year and 1.3% this year.

But the share of military spending would drop back to 1.25% in 2023 with any extra spending negotiated year by year.

This is below NATO’s target of 2% of economic output on defence.

The military budget is expected to rise to €45.1bn in 2020 from planned spending of €43.2bn this year, it was reported.

Germany had pledged to meet a 1.5% share by 2024. The US spends just above 3% of GDP on defence.

This could anger US president Donald Trump, who has repeatedly blasted NATO leaders for not meeting the spending target by 2024. European allies, many of whom don’t meet the target, have said security is not just about spending targets.

Belgium and Spain remain at below 1% of GDP. Only six members of NATO - Britain, Estonia, Greece, Latvia, Lithuania and Poland – hit the 2% target in 2018.

To balance the boosted budget, government ministries will have to identify combined spending cuts of €625m each year, with programme delays contributing to additional savings, it was reported.

Overall, NATO countries spent almost a trillion dollars on defence in 2018, according NATO’s annual report published last week, with just under 70% of that made up by the United States, although not all Washington’s spending goes towards defending European soil.

The draft budget plan, presented yesterday, assumes that the Germany’s economy will grow by 1.0% in 2019, down from initial projections of 1.8%, a finance ministry source told Reuters this week.