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German Unemployment Remains Above 3 Million Amid Prolonged Slump

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Germany’s unemployment total remained above three million in February, underscoring persistent strain in Europe’s largest economy after two consecutive years of contraction. Labour office data showed 3.07 million people out of work, slightly down from the previous month but 81,000 higher than a year earlier. On a seasonally adjusted basis, unemployment rose by 1,000 to 2.977 million, while the jobless rate held steady at 6.3%, matching forecasts.

Labour office head Andrea Nahles said the market was still struggling to regain momentum following the winter period. The figures pose a challenge for Chancellor Friedrich Merz, who has pledged to revive growth through increased infrastructure and defence spending. Analysts said that with the economy stagnating for years and industry facing structural pressures, a gradual weakening in the labour market was largely unavoidable, with no clear turning point yet in sight.

Other data offered mixed signals. Inflation dipped below 2% in several German states in February, pointing to easing price pressures nationally, in line with a broader slowdown across the euro zone. Real wages continued to recover, rising 1.9% in 2025 and 2.9% in 2024, though they remain below pre-2019 levels after inflation shocks linked to the pandemic and Russia’s 2022 invasion of Ukraine eroded purchasing power.

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German Chancellor Merz Visits China Amid Trade Challenges

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German Chancellor Friedrich Merz has embarked on his first official visit to China, leading a delegation of senior German business leaders, including heads of Volkswagen, BMW, and Mercedes-Benz. The trip aims to strengthen economic ties as Germany faces growing trade deficits and competitive pressures from China’s booming electric vehicle industry. Merz’s visit comes amid concerns over supply chain vulnerabilities and global economic rivalry.

China, Germany’s largest trading partner in 2025, has reversed years of trade surpluses, leaving Germany with a deficit of nearly €90 billion. German officials warn that export controls, overcapacity, and rising competition from Chinese firms have created a challenging environment for German manufacturers, prompting calls for Merz to negotiate better terms for industry.

During his visit, Merz is scheduled to meet President Xi Jinping and Prime Minister Li Qiang, signing economic agreements and visiting major facilities, including a Mercedes-Benz EV plant and Siemens Energy site. The trip reflects Germany’s strategic effort to balance trade relations with China while addressing EU measures protecting local industries from underpriced imports.

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Germany’s Coalition Divided Over Inheritance Tax Reform Ahead of Key Elections

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Germany’s Social Democratic Party (SPD) has proposed sweeping changes to inheritance tax rules, setting up a fresh dispute with its conservative coalition partner. The reforms aim to make the system fairer by increasing taxes on large estates while easing the burden on smaller inheritances, just as the government faces several important regional elections this year.

While both the SPD and Chancellor Friedrich Merz’s conservative bloc agree on the need for tax relief to revive the weak economy, they strongly disagree on how to achieve it. The disagreement adds to growing tensions within the coalition, reinforcing public perceptions of a divided and slow-moving government at a time when voters are demanding clear economic direction.

Under the SPD plan, heirs would be able to inherit up to around one million euros tax-free, and family homes would remain exempt if the heir continues to live there. Family businesses would receive allowances of about five million euros, but larger firms would face higher taxes — a move strongly opposed by conservatives, who warn it could hurt Germany’s small and medium-sized companies.

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Merz Urges Europe to Assert Its Interests to Protect Peace and Prosperity

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German Chancellor Friedrich Merz has called on Europe to assert its interests more forcefully to safeguard peace and prosperity in 2026, warning of mounting threats from Russian aggression, global protectionism and shifting relations with the United States. Speaking in his New Year’s address, Merz said the war in Ukraine posed a direct threat to Europe’s freedom and security, adding that Russia’s actions were part of a broader strategy targeting the entire continent.

Since taking office in May, Merz has played a key role in pushing European support for Ukraine and strengthening Germany’s defence posture. He said Germany now faces daily challenges including sabotage, espionage and cyberattacks, underscoring the need for greater resilience. Merz also highlighted economic risks from rising protectionism and Europe’s dependence on imported raw materials, which he said were increasingly being used as tools of political pressure.

Merz pointed to Germany’s struggle to revive its export-driven economy after two years of contraction, as Berlin seeks to reduce reliance on China while navigating global trade tensions and the impact of U.S. President Donald Trump’s tariff policies. Acknowledging a more difficult partnership with Washington since Trump’s return to office in 2025, Merz said Europe must rely more on itself, stressing that confidence, not fear, should guide the continent’s response as it works to renew long-standing peace, freedom and prosperity.

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Kremlin Rejects Claims Putin Wants Soviet Revival or NATO Attack

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The Kremlin has dismissed European accusations that Russian President Vladimir Putin aims to restore the Soviet Union or launch an attack on NATO. Spokesman Dmitry Peskov said on Tuesday that such claims were false and disrespectful, insisting that Putin has repeatedly stated it is impossible to recreate the U.S.S.R. Putin, who once described the Soviet collapse as a major geopolitical catastrophe, has long argued this view relates to the hardship faced by Russians at the time, not a desire to rebuild the former bloc.

The remarks came after German Chancellor Friedrich Merz claimed Putin seeks to revive the “old Soviet Union” and posed a threat to NATO. Western leaders have frequently warned that a successful Russian campaign in Ukraine could embolden Moscow to target NATO member states. Putin, however, has repeatedly called the idea irrational, pointing to NATO’s military superiority.

Peskov rejected Merz’s statements as misguided and offensive, saying the allegations misrepresent Russia’s intentions. He reiterated that suggestions of Moscow preparing to attack NATO are “complete stupidity,” accusing critics of misunderstanding or deliberately twisting Russia’s official positions.

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Merz Secures Pensions Bill Despite Internal Revolt, Exposing Leadership Strains

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German Chancellor Friedrich Merz narrowly secured parliamentary approval for a contentious pensions bill, passing it with 318 votes in the 630-seat Bundestag, despite internal rebellion from members of his own conservative bloc. The bill, which adds €185 billion to pension spending over 15 years and maintains pension levels at 48% of average wages until 2031, was a key coalition agreement with the centre-left SPD.

However, the tense vote exposed Merz’s shaky control over his ruling coalition, just seven months into his term. Several conservative lawmakers opposed the plan, calling it financially irresponsible and unfair to younger generations. Analysts warn that internal conflicts and governance challenges are damaging Merz’s authority and could hinder future economic and defence reforms, while fuelling a surge in support for the far-right AfD.

Merz has pledged broader pension reforms next year, including possible longer working years and delayed pension eligibility. Despite winning international praise for his stance on Ukraine, his domestic approval has fallen sharply to about 25%. Polls show declining support for both governing parties, reinforcing concerns that the coalition appears divided, ineffective, and increasingly unstable.

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Germany Introduces Voluntary Military Service for 18-Year-Olds

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Germany’s parliament has approved a voluntary military service program for 18-year-olds, marking a major shift in the country’s defense policy. From January 2026, all 18-year-olds will receive a questionnaire asking if they are interested in joining the armed forces. While participation will initially be voluntary for men and women, mandatory medical exams for men will start in July 2027 to assess fitness for potential service. The move aims to strengthen Germany’s military after Russia’s invasion of Ukraine and to meet NATO force targets.

The decision has sparked protests across the country, with students in as many as 90 cities planning strikes. Critics argue that military service disrupts lives, encourages obedience training, and exposes young people to the realities of war. In Hamburg alone, about 1,500 people were expected to protest, highlighting widespread skepticism among German youth about the new law.

Germany’s armed forces currently number around 182,000, and officials plan to increase this to 260,000 by the early 2030s, supplemented by 200,000 reservists. Incentives for voluntary service include a monthly salary of €2,600, making it more attractive than similar programs in France. The legislation reflects Chancellor Friedrich Merz’s push to rebuild the Bundeswehr into Europe’s strongest conventional army amid growing security concerns.

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Germany’s Merz Wins Crucial Vote on Pensions Reform Despite Internal Revolt

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German Chancellor Friedrich Merz secured an absolute majority in parliament on Friday for his controversial pensions bill, overcoming resistance from younger members of his own conservative bloc. The draft, which guarantees current pension levels until 2031, passed with 319 votes, indicating it likely succeeded without the support of opposition parties.

The vote came after days of turbulence within Merz’s Christian Democratic Union/Christian Social Union (CDU/CSU) alliance. A youth faction inside the party had threatened to vote against the bill, arguing that it preserves an unsustainable system and places an unfair financial burden on future generations.

The dispute underscored growing questions about Merz’s control over his party and the stability of the coalition government, which includes conservatives and the center-left Social Democrats. Analysts say the internal tensions and reliance on a slim parliamentary majority point to challenges ahead for implementing reforms aimed at reviving Germany’s struggling economy and strengthening its neglected military sector.

Across Europe, pensions and generational fairness are emerging as hot political issues as aging populations strain budgets. Although Merz ultimately avoided the embarrassment of needing opposition support—despite a surprising offer from the Left Party to abstain—the infighting has deepened doubts about his ability to steer major legislation in the future.

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Belgium Opposes EU Plan to Use Frozen Russian Assets for Ukraine

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Belgium has raised strong objections to the European Union’s plan to use frozen Russian assets to provide a “reparations loan” to Ukraine. Prime Minister Bart De Wever and Foreign Minister Maxime Prévot argue that tapping €140bn of Russian state assets held in Belgium could expose the country to massive legal risks and potential bankruptcy if Russia takes action. They have called for an alternative approach, suggesting the EU borrow the necessary funds from financial markets instead.

Most EU countries, including Germany, support the proposal, viewing it as an urgent way to fund Ukraine’s defense amid ongoing Russian attacks. Chancellor Friedrich Merz and EU foreign policy chief Kaja Kallas argue that a reparations loan would strengthen Europe’s position against Moscow and could incentivize Russia to negotiate peace. However, legal experts and Belgium’s central securities depository, Euroclear, caution that lending these frozen assets carries significant financial and legal dangers.

The European Commission is preparing a legal framework to address the plan, but disagreements among member states have delayed progress. Belgium insists on legally binding guarantees to share risk with other EU countries, while Russia has threatened decades of litigation if the assets are used for Ukraine. With the EU summit approaching, a final decision on the contentious proposal remains uncertain.

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Germany Urges Trump to Invite South Africa to 2026 G20 Summit

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Germany said on Thursday it would work to convince U.S. President Donald Trump to reverse his decision to exclude South Africa from next year’s G20 summit in Florida. Trump has repeatedly accused South Africa’s black-majority government of mistreating its white population, citing widely debunked claims of attacks on white farmers. These assertions led Washington to boycott the recent G20 summit in Johannesburg, despite the group adopting a joint declaration on climate and global challenges.

South African President Cyril Ramaphosa’s office said several G20 members had privately expressed support for Pretoria after Trump’s comments. German Chancellor Friedrich Merz publicly stated he would lobby Trump to extend an invitation to South Africa, stressing that G20 and G7 forums should not be reduced without solid justification. South Africa, however, said it would not campaign for backing from individual countries, noting the delicate diplomatic position many face with the United States.

Trump’s criticism intensified after he claimed South Africa mishandled the handover of the G20 presidency—an allegation Pretoria denies, saying the U.S. delegation was not present at the time. Although it is unclear how the U.S. could formally block South Africa’s participation, experts suggest visa denials could be one tactic. The dispute adds fresh strain to already tense U.S.–South Africa trade negotiations, which have been affected by new U.S. tariffs and cuts to financial assistance earlier this year.

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