German Election Results: The Future of Defence Spending and The International Risks

Germany’s recent federal election has ushered in a period of political upheaval, with significant implications for defense spending, fiscal policy, the risk environment, and international relations. The Christian Democratic Union (CDU), led by Friedrich Merz, secured a plurality with 28.5 percent of the vote, while the far-right Alternative for Germany (AfD) achieved a historic second place with 20 percent. This electoral outcome not only reflects a rightward shift in Germany’s political landscape but also presents formidable challenges in forming a stable government and addressing critical policy issues and international risks.

Election Results and Political Realignment

The CDU’s victory, albeit with one of its worst results since 1949, positions Friedrich Merz as the likely next Chancellor. However, the surge of the AfD, particularly in former East German states, underscores a growing polarization within the electorate. The Social Democratic Party (SPD) suffered a significant defeat, obtaining only 16.4 percent of the vote, marking its worst performance since 1887. The Greens and the Left Party (Die Linke) also experienced shifts, with the Greens receiving 11.6 percent and Die Linke increasing their share to 8.8 percent after successful campaigns on TikTok and a high youth voter turnout on election day.

Forming a coalition government will be a complex endeavor. Merz has categorically ruled out any alliance with the AfD, citing fundamental differences on foreign and security policies. This leaves a potential partnership with the SPD, despite their reluctance to join a CDU-led government. The presence of fringe parties with substantial representation further complicates the possibility of constitutional reforms, particularly concerning fiscal policies and defense spending.

Implications for Defense Spending in Europe

Germany’s defense policy stands at a crossroads. The geopolitical landscape, marked by a resurgent Russian threat and diminishing US security guarantees under President Donald Trump, necessitates a reevaluation of military capabilities. Defense Minister Boris Pistorius has advocated for reinstating conscription and increasing defense spending to at least 3 percent of GDP, emphasizing the urgency of preparing for potential threats within the next decade.

However, the electoral gains of the AfD and Die Linke, both opposing increased military expenditure, pose significant obstacles. Their combined representation forms a blocking minority capable of thwarting amendments to the “debt brake,” a constitutional rule limiting government borrowing. This fiscal constraint hampers the CDU’s plans to finance defense enhancements and necessary infrastructure projects.

The German “Debt Brake” and Fiscal Policy Challenges

The “debt brake” (Schuldenbremse), instituted in 2009, restricts the federal deficit to 0.35% of GDP annually, with federal states prohibited from incurring new debt citeturn0search6. While designed to ensure fiscal discipline, this policy has come under scrutiny, especially in light of economic stagnation and pressing investment needs. A January poll indicated that 55 percent of Germans now support revising these strict borrowing limits, especially if it is for defence spending and supporting Ukraine.

The CDU’s ambition to relax the debt brake to facilitate increased spending on defense and infrastructure faces formidable opposition within the Bundestag. The AfD and Die Linke’s enhanced parliamentary presence enables them to block constitutional amendments required for such fiscal reforms. This impasse raises concerns about Germany’s ability to adapt its fiscal policies to current economic and security challenges.

International Risk and Geopolitical Ramifications

Germany’s political and fiscal decisions reverberate beyond its borders, influencing European stability and transatlantic relations. Friedrich Merz has articulated a vision for European unity and a degree of independence from US influence, particularly in defense matters. This stance emerges amidst perceived US disengagement from European security under the Trump administration.

The potential inability to augment defense spending due to internal political divisions could weaken NATO’s collective security framework, emboldening adversarial actions from nations like Russia. Moreover, the rise of the AfD reflects a broader trend of right-wing populism gaining traction in Europe, potentially leading to fragmented policies on immigration, trade, and foreign affairs.

Economically, adherence to the debt brake amidst a recessionary environment may stifle growth and deter investment, which could be one of the most significant risks for Germany. The manufacturing sector in Germany has been particularly affected by high energy costs and competition from China, necessitating substantial public investment to revitalize the economy. Failure to address these issues could have cascading effects on the European Union’s economic health, given Germany’s central role in the bloc and the potential for contagion risk.

Germany stands at a critical juncture, with its recent election results highlighting deep-seated political divisions and presenting substantial challenges in governance. The interplay between the need for increased defense spending, the constraints of the debt brake, and the complexities of coalition politics will significantly influence the nation’s trajectory. The outcomes of these internal deliberations will not only shape Germany’s future but also bear profound implications for international stability and the global balance of power.