GERMANY: Merz Commits To Defence Increase As Foreign Min Warns Of US Shortfall

Delivering his first speech to the Bundestag as chancellor, Friedrich Merz commits to his gov't providing “all necessary financial resources” to see Germany's military become the most powerful in Europe in conventional terms (i.e. as a non-nuclear power). Merz said that "Strength deters aggression; weakness invites aggression," as his gov't prepares to take advantage of reforms to the debt brake enacted prior to the new coalition coming to power. The gov't will now have the ability to raise defence spending as any increase above the level of 1% of GDP is now exempted from the brake. 

• While the gov't has committed to significant defence spending increases, the immediate pressure on German (and wider European) defence spending could come sooner rather than later depending on the US' position on continuing to fund the Ukrainian military and provide financial aid to Kyiv. Germany's new Foreign Minister Johann Wadephul said a short time ago that "We won't fully be able to fill the gap if the US withdraws from peacekeeping funding." Meanwhile, Ukrainian Finance Minister Sergii Marchenko has said that he sees "some kind of gap in support next year".