Germany faces “one of the most challenging phases” in its recent history amid global turmoil, Chancellor Friedrich Merz said on Wednesday, as he defended his government’s proposed budget for 2026 in a major parliamentary debate.
Merz has controversially chosen to remain in Berlin to focus on domestic affairs this week as global leaders convene in New York at the UN General Assembly.
The tense international situation was a key theme of his speech to lawmakers in the Bundestag, Germany’s lower house, with Merz arguing that “the entire Western community of values is facing perhaps its greatest test” amid ongoing conflicts and trade disputes.
The insecurity has direct consequences for the German economy, which is geared towards global markets and depends on a rules-based world order, the chancellor argued.
“Only a growth-oriented economy will generate the resources we need to finance infrastructure, practise solidarity and guarantee social security in the long term,” Merz said, warning that trade unions and employers are deeply concerned about job losses.
“That’s why we have to act, we have to do it quickly and we have to do it soon,” he added.
However, he flatly rejected criticism from opposition parties that the government intends to slash the country’s welfare system.
“The aim of the reforms we are launching is not to dismantle the welfare state, but to maintain the welfare state as we really need it,” he insisted.