Stay informed with free updates
Simply register German politics Myft Digest – delivered directly to your inbox.
The German election winner Friedrich Merz faces serious hurdles to increase defense spending in the largest nation in Europe, after the parties that spoke out against the armament of Ukraine had secured enough seats to relax the strict limits of the country for the to prevent public bonds.
Merz had openness to the reform of the “debt brake” of Germany to finance urgently needed infrastructure investments and a European dispute to increase the defense budget.
But the right-wing extremist alternative for Germany (AfD) and the Hard-Left Die Linke have gained more than the 210 seats that were required for a “blocking minority” in the German Parliament.
This gives you the authority to prevent a change in Germany’s debt brake, a rule anchored in the 2009 constitution to limit the government’s borrowing and to keep the structural deficit to 0.35 percent of GDP.
The same condition applies to the creation of a special fund from the compensation such as the 100 billion euro pot, which Chancellor Olaf Scholz announced in 2022 in order to carry out a revision of the German forces according to Vladimir Putin’s full invasion of Ukraine.
Holger Schmieding, chief economist at Berenberg Bank, warned that the result on Sunday could create serious headaches for Merz. “At a time when it is crucial to increase the expenditure on the military and Ukraine and to facilitate the tax burden for workers and companies, Germany can have difficulty finding the household room for it,” he said.
“A failure to increase military spending could bring Germany into great difficulties with its NATO partners. The angry US President Donald Trump would also increase the risk of a US-EU trade war, ”added Schmieding.
Jan Techau, an analyst for Germany and European defense at the Eurasia Group, said: “In one of the biggest issues – perhaps the biggest problem – for the next government that you have a blocking minority. . . This is a massive problem. “
Economists have warned that without changing the debt brake or creating a special off-budget fund, it will be impossible to finance tens of billions of euros from euros Urgently needed additional investments In the largest economy in the euro zone. This includes money for the crumbling transport and communication infrastructure as well as a much higher defense budget after Ukraine invasion.
The extent of the challenge was caused by Trump’s return to the White House, his introduction of direct peace negotiations with Russia and his threat of pulling the security guarantees of US security fighting from Europe, which forced the European leaders to conduct crisis talks as the vacuum filled should become.
Although Merz said that he believes that he can find the funds to finance investments Reduce welfare payments And stimulating economic growth do not believe that such measures will be sufficient.
If Merz decides terrain.
The AfD, which secured a historical second place on Sunday with almost 21 percent of the vote, supports higher defense spending, but is vehemently against the armament of Ukraine and against changing the debt brake. Merz has also excluded any form of direct cooperation with the right -wing extremist party.
The left, which ended almost 9 percent, supports the reform of the debt brake, but is decisively against military support for Ukraine and higher expenses for the German forces.
Jens Südekum, professor of international economy at Heinrich Heine University of Düsseldorf and an advocate of the debt brake reform, described the situation as “difficult to negotiate, but not impossible”.
He said that it could be possible to negotiate a contract with the left, possibly by creating a special off-budget fund for civil infrastructure and savings of around EUR 50 billion from the regular budget to finance defense.
“The problem is that you will ask for a price,” he said about the left. Merz could also be exposed to a strong opposition from his party to a deal with the hard-left-the-die left, he said.
Some analysts, including Schmieding from Berenberg, have argued that Merz could suspend the debt brake by explaining a national emergency, possibly in the event of serious deterioration in the situation in Ukraine.
However, such a step would only enable a limited increase in expenses for a specified period. It would also be risk that the constitutional court of Germany, which was put down in 2023 Blew a 60 billion euro hole In the federal budget after the judgment against the attempt to use emergency resources from pandemic to pay the green transition.
“In the easier constellation, it would only have been possible that the CDU, Social Democrats and Greens have a super majority and implement fiscal policy that Germany needs,” said Südekum. “Now you need tweaks and twists and problem expenses.”
