Germany has come to its senses on defence - and it's a chance for Britain

After the victory of his conservative alliance in Sunday’s elections, Friedrich Merz, who is set to become Germany’s next chancellor, was blunt about the task ahead: the country faces a seismic challenge to adapt to the whims of the United States under President Donald Trump.

“It is clear that the Americans, at any case the Americans in this administration, do not care much about the fate of Europe,” he said “This is really five minutes to midnight for Europe,” he added, before mulling over whether leaders meeting at a Nato summit in June “would still be talking about Nato in its current form or whether we will have to establish an independent European defence capability much more quickly”.

These would be astonishing words from any mainstream German politician, let alone an incoming chancellor from the CDU-CSU alliance which has traditionally seen the US and Nato as its guarantor of security. Merz, who spent a decade chairing the Atlantic Bridge, a cross-party group of European and US politicians, business leaders and academics, would otherwise be the last person to suggest a break from Washington.

But these are uncertain times, and Trump’s questioning of the Nato security pledge – and his readiness to negotiate a peace deal with Russia over the heads of Ukraine and the rest of Europe – have forced Merz’s hand.

The 69-year-old corporate lawyer could be the perfect person to lead Europe’s defence revival, which policymakers say needs to include a massive spending surge, co-ordination on defence industries, credible security guarantees for Ukraine and a new defence engagement with Britain.

This is seen by many in Brussels and Berlin as the biggest challenge for the European Union since the start of the European project in the 1950s, potentially dwarfing other projects like the creation of the single market and the euro. It is an issue that leaders have ducked for decades, mainly because it is so politically sensitive, with politicians fearing any common action on defence could impact national sovereignty and even drag the continent into unwanted wars.

At the heart of the issue is spending. European countries, including Britain, have long accepted that they should raise their defence budgets: the Nato summit in Cardiff in 2014 – years before Trump was first elected president – committed members to spend 2 per cent of GDP on defence.

While European countries have slowly raised spending, even now they remain at the threshold of 2 per cent, far lower than the 3 per cent that planners say is now needed. The European Commission is planning a massive defence budget, up to €500bn (£415bn), but it would need a special funding instrument to be agreed by the rest of the European Union – like the EU’s 2020 €800bn (£663bn) Covid recovery fund – or so-called defence Eurobonds.

This is where Merz comes in. Unlike the ultra-cautious outgoing German Chancellor Olaf Scholz, from the social democrat SPD, Merz has signalled he is ready to break with the EU debt financing taboos to agree the scheme.

That is particularly welcome for France, which has been frustrated by Scholz’s reluctance to engage in European security debates. “The Franco-German engine was largely dysfunctional under Scholz, probably an all-time low in the bilateral relationship,” says Camille Grand of the European Council on Foreign Relations. “Many in Paris place a lot of hope in Merz. His most recent statements on a more capable Europe, even opening a European nuclear debate were well received.”

Similarly, the EU is negotiating a security pact with Britain as part of the Brexit reset. Again, Merz has signalled that he is more flexible in how the EU could co-ordinate with the UK outside Nato and in distinct projects, like supporting Ukraine.

“The British defence industrial sector is still strong,” says Ian Bond, deputy director of the Centre for European Reform. “It makes sense to include Britain in what the European Union is doing to cope with a world in which you basically can’t be certain that the Americans would turn up if you were attacked.”

However, the key challenge will be to change Germany’s own budget, and Merz has talked of a massive €200bn (£166bn) splurge of additional defence spending to close the gap.

Germany’s constitutional “debt brake” currently prevents any government from a structural deficit of more than 0.35 per cent of GDP – too low for what is needed to significantly raise defence spending.

Merz has already said he wants to scrap the debt brake, and he has the support of the SPD, his likely coalition partner, as well as the Greens. Their backing still does not add up to the two-thirds parliamentary majority needed to change the constitution in the incoming Bundestag. However, Merz has suggested that the measure be pushed through the outgoing legislature, which formally steps down on 25 March.

Germany’s partners in the EU, Nato, Britain and Ukraine will be relieved if Merz can ramp up the spending. But as he said on Sunday, his radical shift was borne from the changes in Washington. “I would never have thought that I would have to say something like this in a TV show,” he said. “But, after Donald Trump’s remarks last week, it is clear that this government does not care much about the fate of Europe.”