Germany’s Defense Reforms Face a Tough Future

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Germany’s defense and security policies have undergone a fundamental shift since Russia began its full-scale invasion of Ukraine in 2022. In a break from the chronic underspending that has characterized Germany’s defense since the Cold War, the government plans to more than double its defense budget by the end of the decade. The €100 billion special fund and reform of Germany’s debt brake have freed up large sources of defense investment. Merz’s deft diplomacy has produced a nuclear-sharing agreement with France and Britain, driven continued support for Ukraine, and reaffirmed Germany’s centrality in NATO. 

However, stubborn economic stagnation and electoral challenges from the left and right are eroding the government’s political legitimacy. Germany’s defense revival rests on fragile economic and political foundations that may threaten its contribution to Europe-wide defense. A continued domestic consensus on defense will become increasingly difficult as pressure intensifies on the governing parties to revive the economy and consolidate political support. 

Germany’s sputtering economy, facing its third year without growth, is an especially weak point. Following the amendment of the debt brake, Merz promised that Germans would feel the effects of a turnaround by the summer. But this has not yet materialized amidst a deeper crisis caused by dwindling export markets, U.S. tariffs, and high energy prices. The political popularity of defense spending will dwindle as German citizens and companies feel continued strain on their finances and income. 

The government is positioning defense spending as a way to invigorate the economy by creating new jobs, offsetting auto industry layoffs, and developing new technologies. However, the reliability of this outcome is disputed: economists at the University of Mannheim have found that defense investment only adds an additional 50 cents of economic growth per euro spent (Krebs & Kaczmarzyk, 2025). And most of current spending is going to procurement and equipment modernization, rather than R&D that could generate valuable technological spillovers (Burikov, 54). Linking defense spending to economic revival also threatens to impede the development of shared European defense capabilities. Indeed, an analysis by the Kiel Institute for the International Economy shows that about 50 percent of German procurement is domestically sourced (Burikov, 54). Because the country’s atrophied defense industry has limited capital for quickly scaling production, much of this increased domestic spending is absorbed by higher prices. 

Even amidst high weapons prices and an ailing economy, Germany must not only maintain but increase its defense spending. The Kiel Institute report shows that the existing level of procurement is largely replacing stocks sent to Ukraine rather than increasing Germany’s own (Burikov, 38). Beyond procurement, there is a pressing need to increase the size of the military. This will incur significant costs in the form of attractive pay packages offered to new enlistees and the indirect effects of removing young Germans from the workforce for several years. 

However, the need for a continued, robust commitment to defense investment faces increasingly fractured domestic politics. The center-left SPD is polling at the lowest levels in its postwar history, and Merz’s CDU is neck-and-neck with the hard-right AfD. Politically fragile defense reforms will only become more contentious as Germany’s leading parties deal with external pressure from the left and right and internal divides over the best course to take. 

Indeed, much of the progress already made has had only shaky political support. Important weapons shipments to Ukraine under the former Scholz government were slow-walked or blocked for fear of domestic political backlash. The debt brake amendment was passed in the lame-duck period of the outgoing government to avoid it being torpedoed by the strengthened far-left and right in the current parliament. The bill hinged on an extraordinary compromise between the government and opposition, and frustrated Merz’s own fiscally hawkish party, to whom he had promised not to touch the debt brake during the 2025 election campaign. 

If, as seems likely, the governing parties continue to lose popular support to their extreme counterparts, German security politics will fracture. Conflict within the SPD over its pacifist orientation and historical ties to Russia may hinder the party’s ability to make a decisive contribution to new defense undertakings. A conscription bill that collapsed last-minute in October is one recent example of this. Meanwhile, Germany’s ascendant extremist parties’ positions on defense reform range from ambivalent (AfD) to categorically opposed (Die Linke). They will only increase pressure on the government to justify its focus on international affairs as domestic issues worsen. If the government cannot make progress on Germany’s economy and regain voter support, divisions in defense politics will obstruct needed progress on weapons procurement, enlistment, and continent-wide defense cooperation. 

Germany will not revert to its pre-2022 inactivity in defense matters. The government has made significant, lasting progress in reforming Germany’s weapons procurement and increasing public support for defense. Still, onlookers should not expect that progress will continue unabated. Faced with dwindling political capital, the coalition’s ability to contribute decisively towards greater European rearmament will diminish. Germany may no longer be a deadweight on European defense, but it is struggling to be a leader. The government’s fragile political legitimacy means that, barring a new external shock, the most important next steps in European defense will not come from Berlin.

Bibliography

— Krebs, Tom and Patrick Kaczmarczyk, “Wirtschaftliche Auswirkungen von Militärausgaben in Deutschland,” University of Mannheim, 2025. 

— Burilkov, Alex et al, Fit for war by 2030? European rearmament e6orts vis-à-vis Russia, Kiel Report no. 3 (Kiel Institute for the World Economy, 2025), 54, https://www.kielinstitut.de/publications/fit-for-war-by2030-european-rearmament-eVorts-vis-a-vis-russia-18193/.