Germany's CDU-Led Government Completes First 100 Days With Defence Overhaul and Budget Breakthrough

Background

Germany's political crisis of late 2025 culminated in the collapse of the three-party traffic-light coalition in November 2025 after the Free Democrats withdrew over irreconcilable differences on economic policy and the federal budget. The snap election held in January 2026 produced a CDU-CSU bloc plurality and a second-place result for the Social Democrats, with the AfD in third place and the Greens failing to cross the five-percent threshold for the first time in their parliamentary history. Friedrich Merz, the CDU leader, assembled a grand coalition with the SPD after six weeks of negotiations, reaching agreement on a coalition treaty that committed Germany to defence spending at or above 2.5 percent of GDP, a major migration law revision, and a targeted reform of the constitutional debt brake that would create ring-fenced borrowing capacity for defence and critical infrastructure investment. The coalition treaty represented a significant rightward shift from the Scholz government's priorities on migration while preserving key SPD demands on social spending levels and the minimum wage. Merz took office as Chancellor in early March 2026 and immediately began the process of rebuilding Germany's relationships within NATO, visiting Washington, Warsaw, and the Baltic capitals in his first three weeks to signal a break from the perceived ambiguity of the previous government's Russia policy.

The First 100 Days

The Merz government's legislative output in its first hundred days has been concentrated in three areas: defence and security, migration, and economic competitiveness. On defence, the Bundestag passed a supplementary budget in April 2026 that increased defence appropriations for the fiscal year to bring spending to 2.7 percent of GDP, the first time Germany has exceeded the 2 percent NATO guideline since reunification. The supplementary budget also committed an additional fifteen billion euros to the special defence fund established by the previous government, accelerating procurement of the Arrow 3 missile defence system, Eurofighter Typhoon upgrades, and a first tranche of future heavy tank replacements. The debt brake reform, which required a two-thirds majority and therefore the support of opposition parties beyond the coalition, passed the Bundestag on September 30, 2026 in a modified form that creates a constitutional exemption for defence investments above 1.5 percent of GDP, effectively allowing the government to borrow for defence while maintaining fiscal constraints on other categories of spending. This compromise was the product of lengthy negotiations with the Greens, whose votes were needed to reach the supermajority threshold, and involved commitments on climate-related infrastructure investments that created tensions within the CDU's fiscal conservative wing.

• Defence budget revised upward to 2.7% of GDP, first time Germany has exceeded the 2% NATO guideline since reunification.
• Debt brake reform passed with Green support, creating a constitutional defence investment exemption.
• Fifteen billion euros added to the Bundeswehr special fund for missile defence, fighter upgrades, and tank replacement.
• Migration law revision passed the Bundestag but faces legal challenges before the Federal Constitutional Court.

European and NATO Context

The significance of Germany's policy shift is amplified by its scale and its demonstration effect within European defence planning. Germany is NATO's largest European member by GDP and population, and its historic underspending on defence has been a persistent source of alliance tension since the 2014 Wales summit established the 2 percent guideline. The Merz government's rapid movement to 2.7 percent sends a signal to other European governments that fiscal conservatism and robust defence investment are not mutually exclusive, and has been received positively by NATO Secretary-General Mark Rutte, who cited Germany's example in September 2026 as evidence that the alliance is achieving real capability improvements rather than accounting adjustments. Within the EU, Germany's posture under Merz has reinforced the Franco-German axis on defence industrial policy, with Berlin and Paris reaching agreement in October 2026 on a joint framework for the Future Combat Air System and the Main Ground Combat System programmes after years of delays caused by industrial disputes and different national requirements. The Bundeswehr itself is in the middle of a structural reform programme that aims to increase the army's deployable strength from its current 60,000 to 85,000 by 2030, requiring significant changes to recruitment, training pipelines, and equipment procurement timelines that the additional budget resources are intended to accelerate. Defence analysts in Berlin note that the legislative and budgetary progress of the first hundred days, while significant, still leaves Germany well behind the timeline needed to field the capabilities NATO's regional defence plans require before the end of the decade.

Sources

• Der Spiegel
• Reuters
• Politico EU
• NATO
• Handelsblatt