The new German model: rearming the economy
As its postwar industrial export model fades, Germany is turning to rearmament to jump-start growth. This controversial strategy risks alienating neighbours and a younger generation that rejects any return to military service. - 2026/09 / 2026/09 germany
Germany’s Federal Republic is embracing a new military strategy to stimulate its economy, despite potential tensions with neighbors. Chancellor Friedrich Merz, during the International Aerospace Exhibition on June 10th, highlighted the country's commitment to rearming its industrial sector, emphasizing the integration of civil and military aviation research.
This shift comes after the collapse of the €100 billion Franco-German Future Combat Air System project, which was plagued by disputes between Airbus and Dassault. At the exhibition, German arms company Diehl Defence announced talks with Ukrainian manufacturer Fire Point for joint long-range missile production, while Mercedes-Benz partnered with Munich startup Tytan Technologies to develop drones.
The German government has also created a €500 billion infrastructure fund and exempted military spending from the 'debt-brake' rule, in an effort to boost growth following the economic impact of the Ukraine war and the energy price surge.
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