ITALY: Referendums Likely To Fail On Low Turnout

Reuters reports that Defence Minister Boris Pistorius is seeking a significant increase in Germany's annual defence budget, according to two of its sources. Pistorius, who hails from the centre-left Social Democrats (SPD) and in opinion polling is one of Germany's most popular politicians, is aiming for more than E60bln per year in new defence spending from 2025 onwards, according to one of the sources. SIPRI reports German defence spending came in at USD88.5B in 2024. 

• In the run up to his (chaotic) confirmation as chancellor on 6 May, Friedrich Merz has sought to emphasise that his gov't will not only take a leadership role in European security with rhetoric, but by committing to significant increases in defence spending.
• Indeed, Merz is using his first full day in office not to shore up his domestic alliances, but instead to travel to Paris and Warsaw for talks with French President Emmanuel Macron and Polish PM Donald Tusk, respectively.
• Roderich Kieswetter, a lawmaker from Merz's centre-right Christian Democratic Union (CDU), told Politico, "What’s needed now is a credible German contribution to Europe’s deterrence posture [against Russia]...[Merz] must meet [Macron and Polish Prime Minister Donald Tusk] with a tangible and credible military and personnel commitment.”
• A major uptick in defence spending from Germany is seen as crucial to Merz's efforts to show unity of purpose from European countries ahead of what could prove a frosty NATO summit in the Netherlands in mid-June. 

Reuters reports that Germany's Defence Minister is seeking a drastic increase in the German annual defence budget, aiming for "more than €60bln". 

The Reuters headline raises a few questions: is the €60bln quoted in addition to current defence spending? Per year or across the current parliamentary term?

• An increase in defence spending of sorts is certainly expected - Germany spent ~€90bln on defence in 2024, so an extra €60bln per annum would be a significant ramp higher per year (+67%), but it's not clear whether this is spread across the current parliament, which would be a much more modest increase.
• €150bln per annum would equate to well over 3% of GDP, which is inside the range of some sell-side estimates, albeit at a much faster pace. Goldman Sachs recently estimated military spending would ramping up to 3% of GDP by 2027 and to 3.5% after that.
• Looking for further clarity as the Reuters story raises several timeline questions.

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