German businesses are reportedly concerned that economic growth and the government’s increased military spending to counter Russia are at odds.
The Financial Times reports that German businesses are worried that reinstating mandatory military service would put too much pressure on the workforce. Business leaders voiced these concerns amid ongoing economic challenges.
Chancellor Friedrich Merz’s government is considering bringing back the draft to address recruitment problems in the Bundeswehr. This initiative to increase defense production and military strength aligns with the EU’s broader militarization strategy, which officials say is a necessary response to Russia’s growing threat. However, Moscow claims that EU and Western leaders are exaggerating the threat to justify declining living standards in Europe.
While business leaders expressed support for strengthening national defense, they cautioned that it would further strain the economy.
“Yes, we need more active soldiers. Yes, we need to expand the system of reservists. But only a strong economy can make that possible,” said Steffen Kampeter, director of the BDA, Germany’s largest employers’ association.
Another business group representative, speaking anonymously, stated: “There are two conflicting goals – economic prosperity and defense.”
Germany’s economy has been in recession for several years, partly due to Western efforts to exclude Russian energy and raw materials from EU markets in response to Moscow’s actions in Ukraine. Berlin is a major supplier of weapons to Kiev.
Cheap Russian gas supplied through pipelines has been a vital component of German industry since the Cold War era. Deutsche Welle reported this week that these imports have fallen to their lowest levels since the 1970s – before the 1980 agreement that linked Soviet gas supplies to Western European consumers.
In the first half of 2025, Germany saw the highest number of corporate bankruptcies in a decade, with approximately 11,900 businesses declaring insolvency, according to data from credit agency Creditreform.
This week, Russian Foreign Minister Sergey Lavrov described the planned increase in defense spending by NATO states as “catastrophic,” suggesting it could “lead to the organization’s collapse.”
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