The German elections had everyone’s eyes on Sunday, and the results were clear. Friedrich Merz and the CDU/CSU have won and are already looking to chart a new course for Germany, especially on security and defence. Spending increases, review of the European-US relationship and NATO, tougher stance on Russia and defence investment are all on the table as coalition talks begin. ‘Peace and security’ was the most important issue for German voters, so both they and the rest of Europe will be watching closely.

Friedrich Merz is keen to swiftly conclude coalition talks following Sunday’s vote. The Social Democrats (SPD) were pummelled in the polls but still got enough votes to give Merz the option to team up and form a majority coalition.

Merz’s comments since the Russian invasion of Ukraine three years ago have been very clear: he wants Germany to have a stronger defence stance. Here is our take on what that could mean for Europe.

A potential paradigm shift towards European security independence

Merz’s recent call for discussions on nuclear deterrence could mean an historic change, since Germany has relied on the US nuclear umbrella under NATO since the post-war era. He has suggested exploring nuclear security guarantees from the UK and France, echoing Emmanuel Macron’s 2020 proposal for strategic dialogues on France’s nuclear deterrence and its role for European collective security.

We expect Merz to quickly seek security synergies with key European partners, including France. He has criticised the previous German government for letting relations with both France and Poland slide and wants to ‘repair’ links between Germany and Europe, intending to first visit both these countries.

Structurally, Merz aims to centralise decision-making on security policy and European affairs by forming a national security council in the Chancellery. This should clear up internal fragmentation and relieve deadlocks which previously stifled government decisiveness.

Preparing Germany’s military for a more leading role in defence

Merz has criticised slow progress on Germany’s ‘Zeitenwende’. Literally translated as a ‘turning point’, the Zeitenwende followed the Ukraine invasion and is marked by increased defence spending, modernisation of Germany’s armed forces, and enhanced European defence cooperation. Despite the Zeitenwende’s €100 billion special fund, results fall far short of expectations and Germany’s military still struggles with equipment shortages.

There is wide political agreement among the CDU/CSU, SPD, the Greens, and even the AfD on the need to strengthen the military. Merz has even floated the idea of reintroducing compulsory military service (an AfD manifesto pledge), arguing that it is necessary to strengthen the country’s defence capabilities.

Time will tell what actions the next government takes but it is already clear this will be a key topic.

Germany’s main parties maintain a broad consensus that support for Ukraine, including humanitarian, financial, and military aid, must continue. Germany is expected to push for stronger EU-wide backing, perhaps even taking a leading role in this.

NATO and strategic autonomy from the US

While Merz has been seen as a pro-Atlanticist and strong supporter of NATO, the shifting global security landscape has led to a reassessment of strategic priorities.

Trump-led foreign policy has alarmed Merz to the risk of the US not honouring NATO commitments and the need for Europe to defend itself. This is a clear break from Germany’s previous governments. Both Angela Merkel and Olaf Scholz were unreceptive to the France-led idea of Europe having strategic autonomy from the US.

But will he truly commit to European defence autonomy and push for a stronger EU defence industry, or will transatlantic cooperation continue to take precedence? The return of Trump’s ‘America First’ approach, including on defence, will challenge Germany’s close ties to the US. It remains to be seen the extent to which Merz would be willing to distance himself from Washington in favour of a Europe-led defence agenda.

At a national level, Merz acknowledges Germany’s lagging defence spending. While rejecting Trump’s demands for 5% of national GDP, he believes that the NATO 2% GDP target should be seen as a baseline. At the same time, he wants to base defence spending on actual needs and not on abstract percentage figures. In line with his predecessors, we can expect him to be cautious about financing through defence bonds. Discussions on financing mechanisms have picked up across Member States and the EU institutions. We will certainly hear more from Germany in next week’s extraordinary Council meeting as heads of EU Member States gather to reflect on financing tools including a potential defence, security and resilience bank as floated by some in Brussels.

Higher defence spending at national and EU level

A more Europe-led defence approach could also mean changes to Germany’s engagement with European defence industrial projects. The CDU/CSU has historically been more open to supporting defence industry growth than Scholz’s SPD, which often hesitated on large-scale military procurement. Whether this translates into a real policy shift will be largely dependent on how Merz navigates domestic constraints and any potential backlash from the US.

Meanwhile, governments in Europe are keen to continue discussions on defence industrial policy and make progress on the European Defence Industry Programme (the Proposal for a Regulation on EDIP). At Council level, Member States awaited the German election outcome, as talks will quickly resume with an aim for a Council position next month. Beyond EDIP, a clearer German position on defence will certainly shake up national politics, while setting the tone for the evolution of EU defence industry policy in the years to come.

Will Merz walk the talk?

With Merz at the helm, the country is likely to witness a shift toward a more self-reliant European defence strategy. The coalition government’s choices will not only shape Germany’s domestic policies but also determine its role in Europe and beyond for years to come. The challenge for Friedrich Merz will be translating rhetoric into lasting structural change.

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