No more free riding on US defense. Bad demographics. Refugees crisis too.
In the 2026 budget, the government subsidy to compensate for pension losses amounts to a hefty €128 billion ($150 billion) — around a quarter of the total budget. The pension commission is under pressure to develop truly practical proposals on an extremely complex issue.
Raising the retirement age from 67 is on the cards.
After grueling debates, the government passed its reform package for the state pension system through the Bundestag in December. The pension level is to remain stable until 2031, a commission will develop fundamental reforms to the system and submit proposals by mid-2026.
Germany pension system is in worse shape than the USA.
At the beginning of 2026, young people in Germany aged 18 and over will receive mail from the government. Men must then complete the enclosed questionnaire, while women can do so voluntarily.
The questions will focus on personal details, educational qualifications and other competences, as well as willingness to perform military service. Participation in a medical examination to assess their overall health and fitness will be mandatory.
The government is counting on finding enough volunteers to increase the number of Bundeswehr soldiers from approximately 184,000 now to between 255,000 and 270,000 over the next decade, and to increase the number of reservists to 200,000.
If all this does not work on a voluntary basis, the government will move to reinstate conscription, which has been suspended since 2011.
The far-right Alternative for Germany (AfD), a party with extremist elements, is already the strongest opposition party in the Bundestag. With several regional elections scheduled for 2026, it’s expected to do well. In the eastern German states of Saxony-Anhalt and Mecklenburg-Western Pomerania, the AfD is currently polling around 40%.
Will the democratic centrist parties be able to take on the far right? And if the AfD becomes the strongest party by a wide margin in both states, will the promise made by the conservative CDU to never cooperate with the AfD hold true?
The issue of migration will continue to be high on the agenda in 2026. Since the current government took office in May 2025, Interior Minister Alexander Dobrindt (CSU) has made it clear that Germany is now pursuing a tough policy toward irregular immigrants with more people being turned back at the border.