German Chancellor Friedrich Merz on EU Defence Spending

By Andrew Gray and Thomas Escritt

BRUSSELS (Reuters) – German Chancellor Friedrich Merz did not rule out common European Union borrowing for defence during his visit to Brussels on Friday. He emphasized that such borrowing must be reserved for exceptional circumstances and expressed concern about the rising global debt levels.

In his first trip to Brussels as chancellor, Merz stated he feels more optimistic about NATO’s future compared to February when he questioned the alliance’s longevity in its current form prior to the June meeting of its leaders.

Merz noted that U.S. President Donald Trump’s administration recognized that European allies are shouldering more responsibility for their security. He reiterated, “America is indispensable for the security of Europe – today and for a long time to come.”

The war in Ukraine and Russia’s hostility towards Europe, combined with fears that the U.S. might not support NATO allies, have prompted European leaders to increase their defence spending and think about common EU borrowing to fund it.

However, Germany, being the EU’s largest economy, traditionally opposes common borrowing except in exceptional cases such as the COVID pandemic. Merz highlighted the need for careful discussions regarding fiscal strategies during a joint press conference with European Commission President Ursula von der Leyen.

He stated that the EU should only incur debt in exceptional circumstances, without confirming if the current situation qualifies as such. Merz pointed out the significant challenge of enhancing the EU’s defence capability.

Before assuming office, he successfully advocated for a major fiscal package allowing for significant increases in national defence spending, signaling a more assertive defence policy compared to his predecessor.

As a fiscal conservative, Merz expressed concern over continually rising global national debt. He questioned how long countries can sustain increasing debt and its interest payments, stating, “We cannot keep taking on debt indefinitely.”

Currently, German debt stands at just above 60% of GDP, significantly lower than the U.S. and below the euro zone average.