Europe
Merz begins coalition talks with SPD after German election victory
CDU leader Friedrich Merz, who won the German federal elections, announced on Monday that coalition talks with the Social Democrats (SPD) had begun immediately.
Merz’s Christian Democrats won the elections by a large margin but now have to find a coalition partner.
As expected, the party’s leading candidate quickly turned to the SPD, the party of incumbent Chancellor Olaf Scholz, as his preferred partner.
“We will hold talks [with the SPD] in the next few days,” Merz told reporters at the CDU headquarters in Berlin on Monday, listing foreign and security policy, managing migration, and strengthening German industry as priorities.
On the same day, Merz will also meet with SPD co-leader Lars Klingbeil, he said, adding that he would also speak with Scholz to coordinate the transition.
Klingbeil, who some see as the new leader of the party after Scholz announced his imminent departure, played it down on Monday, saying it was not certain that the SPD would join a coalition but added that it was “ready to hold talks.”
The share of seats for the center-left and center-right parties fell by a third compared to the last election in 2021. The coalition of the Greens and the CDU failed to secure a majority, while the liberal Free Democrats (FDP) failed to re-enter parliament.
The CDU could have had a majority with the right-wing Alternative for Germany (AfD), but Merz once again rejected formal co-operation on Sunday.
According to the Munich-based Ifo Institute, reaching NATO’s spending target of just 2% would require 95 billion euros annually from 2028 onwards, almost double the current defense budget. A possible 3% target would require 140 billion euros.
To change the constitution, however, a two-thirds majority in the German parliament is required, which the center parties CDU/CSU, SPD, and Greens lack, making Die Linke (Left Party) and AfD the key parties.
The Greens have proposed to call an emergency session of the Bundestag within the next 30 days, while parliament is still officially in session under its previous composition, in order to allow new borrowing and defense investments. Both Merz and Scholz have signaled that they are open to this approach.
One option would be to agree to reform the “debt brake,” a constitutional limit on the budget deficit, in order to increase the fiscal leeway, including for defense.
Introduced in 2009, the debt brake limits structural public deficits to 0.35% of GDP but has recently come under criticism for hindering investment in infrastructure and defense.
Alternatively, the government could set up a special extra-budgetary fund outside the limits of the debt brake, which could be approved by a two-thirds majority. Such a special fund of 100 billion euros was created after the war in Ukraine, but it will be exhausted by 2027.
The CDU officially wants to keep the debt limit, but Merz signaled during the campaign that he is open to reform.
The SPD is in favor of reform and has previously argued that higher defense spending should not come at the expense of pensioners, the welfare state, or other public investments.
Markus Soeder, leader of the CDU’s Bavarian sister party, the Christian Social Union (CSU), echoed these views on Monday, arguing that it would not be possible to organize defense by “cutting everything” and causing “social tensions.”
Merz may also opt for tough negotiations with the Left Party in the new parliament. The Left Party leaves the door open to jointly reforming the debt brake but opposes higher defense spending.
But given the urgency of the situation and the squeeze on the center, the old rules seem to be changing rapidly.
Merz said his priority was to end the crisis situation in Germany and restore confidence after a difficult three-year period.
“Some of you will share the view that this period may be one of the last chances to achieve this,” he told reporters.
Europe
Outgoing UK PM Starmer to boost defense spending by £1 billion to secure legacy
Outgoing British Prime Minister Keir Starmer is pledging to secure at least £1 billion in additional funding for the defense sector, according to people familiar with the matter.
The move is being viewed as an effort by Starmer to cement his political legacy in the prime minister’s office before stepping down, the Financial Times reported.
Sources said Starmer aims to publicly present the defense sector investment plan on Tuesday, June 30, following multiple prior delays to its publication.
Under the plan, the total funding volume for the armed forces over the next four years is expected to rise approximately £14.5 billion to £15 billion above previously projected levels.
The Starmer-led government had previously proposed providing £13.5 billion in additional resources for defense needs.
However, former Defence Secretary John Healey opposed the prime minister’s proposal, viewing the amount as insufficient, and subsequently resigned from his post in June.
Healey had insisted on an £18 billion increase in the defense budget. In his resignation statement, the outgoing secretary called on the head of government to commit to raising military spending to 3% of gross domestic product by 2030.
Healey noted that the prime minister’s existing plan would only maintain this ratio at 2.68%.
Following these developments, newly appointed Defence Secretary Dan Jarvis reshaped the budget plan and made several difficult decisions, according to sources.
The new program drafted by Jarvis reportedly places a higher priority on the combat readiness of the military and the deployment of autonomous technologies—including unmanned ground vehicles—across all military units compared to the proposals put forward by the departed Healey.
A government official indicated that in the event of potential last-minute disruptions, the ultimate deadline for the announcement would be July 6, immediately ahead of the NATO summit to be held in Ankara.
The Financial Times pointed to the obligation to demonstrate to allied countries, most notably US President Donald Trump, that the United Kingdom is making serious investments in defense as a key source of pressure on Starmer.
According to assertions in the report, Starmer could hand over prime ministerial authority to Andy Burnham, who is seen as his strongest successor, as early as July 20.
Sources familiar with the process noted that Burnham has already begun receiving briefings on government operations.
Furthermore, sources stated that Burnham has privately agreed with arguments that the spending plan should be approved before the NATO summit rather than being delayed.
Conversely, one source did not rule out the possibility that the incoming prime minister could face more intense pressure, which could lead to a reassessment of defense funding.
Commenting on the position of the military leadership, the source remarked: “The military wing has adopted an attitude of ‘it is better than nothing,’ but we will have to renegotiate this issue with the new Prime Minister, Andy Burnham, in any case.”
Keir Starmer announced in June that he would resign following pressure from within his own party.
Starmer has led the British government for approximately two years.
Europe
Europe faces 15-year low in winter gas reserves as June storage targets fall short
European Union member states risk entering the upcoming heating season with their lowest natural gas reserves in 15 years, according to industry assessments.
A report by consultancy firm Wood Mackenzie, published by the Financial Times, warns that if current trends persist, energy markets could face a new wave of price spikes ahead of the winter period.
Analysts project that European underground gas storage facilities may reach a fullness level of only 76% by the end of the injection season, which typically runs from April to October.
After a harsh winter left storage facilities at a mere 28% capacity at the start of the season, EU nations are struggling to rebuild their reserves to historical norms.
According to data from Gas Infrastructure Europe (GIE), the current average storage fullness level stands at 48.29%.
June, traditionally the highest-volume month for filling underground storage facilities in the European energy sector, failed to deliver the targeted efficiency this year. Industry officials note that above-normal temperatures expected in July and August will drive up electricity consumption for cooling, making it even more difficult to direct gas into storage.
Having severely depleted its reserves during the past two harsh winters, Europe must store approximately 70 billion cubic meters of natural gas to prepare for the upcoming winter.
However, the storage injection rate failed to accelerate in June, falling 14.7 percentage points behind the five-year average. In the final week of June alone, this deficit widened by an additional 0.2 percentage points.
Renewable energy sources are also proving insufficient to bridge the supply gap. According to WindEurope data, the share of wind energy in electricity generation averaged approximately 14% in June.
This is down from 15% recorded during the same period last year, with the share of wind-generated electricity dropping to as low as 9% in the second half of June. A heatwave sweeping the region, with temperatures hovering two degrees Celsius above seasonal norms, represents another key factor driving up energy demand.
Multiple global geopolitical developments underpin the natural gas shortfall confronting Europe. Disrupted shipments of liquefied natural gas (LNG) through the Strait of Hormuz due to hostilities between the US and Iran, combined with production declines in Qatar and the United Arab Emirates (UAE), have tightened global supply.
Meanwhile, in line with decisions by the Kyiv administration, the transit pipeline carrying Russian natural gas to Europe through Ukrainian territory has been completely shut down. The EU must now secure gas not only for its own domestic consumption but also to supply facilities in Ukraine.
In an effort to bypass this halt in Gazprom’s pipeline gas through increased LNG imports, EU countries purchased 109 million tons (approximately 142 billion cubic meters) of LNG last year, representing a 28% increase over the previous year.
However, LNG imports in June fell by approximately 17% compared to the same month last year, dropping to 7.8 million tons—the lowest level in 10 months.
Another critical factor squeezing supply in the European market is the EU’s strategy to phase out Russian energy products entirely.
Russia currently supplies 14% of Europe’s total LNG imports.
According to a phased embargo plan approved by the European Council, LNG imports from Russia will be completely banned starting January 1, 2027.
The import ban on Russian pipeline gas is scheduled to take effect on September 30, 2027. While a transition period is provided for existing contracts, member states have been tasked with the obligation to verify the country of origin for all imported natural gas.
Despite these market uncertainties, the “day-ahead” spot gas price at the Dutch TTF hub—Europe’s benchmark gas trading platform—declined to $475 per thousand cubic meters at the end of June, down from an average of $565 in May.
With a total active gas storage capacity of 109 billion cubic meters, Europe maintains its position as the largest importer in the global LNG market.
Europe
Buckingham Palace updates King’s official role to focus on securing faith in multi-faith Britain
The official job description of the British monarch has been formally revised to state that the King’s role is to “secure the environment for faith” within a multi-faith nation, according to a newly updated definition of the Crown’s responsibilities published by Buckingham Palace.
Under the rewritten description, the King, who holds the title of “Supreme Governor of the Church of England,” is tasked with preserving a supportive space for religious practice.
The adjustment was disclosed in the 2025–26 Sovereign Grant report, the annual financial and administrative review of the royal household. It modifies the definition of the King’s role as “Head of the Nation,” which last year described the monarch as the “Head of the Church of England and Defender of the Faith.”
This year’s report details the role with greater specificity: “His Majesty is Supreme Governor of the Church of England and secures the environment for faith in a multi-faith nation.”
Prior to his coronation, intense public debate centered on whether King Charles III would break with his Christian predecessors by choosing to be styled as “Defender of Faiths” in the plural, rather than the traditional singular “Defender of the Faith.” Ultimately, the King chose to retain the historic singular formulation.
Nevertheless, both during his tenure as the Prince of Wales and since ascending the throne, the King has made interfaith dialogue a cornerstone of his public life.
Regularly referencing the Abrahamic religions, King Charles maintains active engagement with Jewish, Muslim, Sikh, Orthodox, and other religious communities across the United Kingdom and globally.
By contrast, the official role of Queen Elizabeth II, as outlined in the Sovereign Grant reports during her reign, was more straightforwardly defined, styling her as “Supreme Governor of the Church of England” and “Head of the Armed Forces.”
In this year’s assessment, the King’s relationship with the military has been rephrased, stating that he “provides spiritual support to our Armed Forces.”
The updated report also outlines several of the King’s core purposes in detail, describing him as a “catalyst for charitable activity,” recognizing his work on “the degradation of nature,” and highlighting his responsibility to “foster a sense of pride, continuity, and stability, reinforcing the social fabric and cohesion of the United Kingdom, particularly at significant moments in national life, both in times of celebration and tragedy.”
The document adds: “His Majesty also has a particular role in bringing together and engaging with communities and faith groups across the different regions and nations of the United Kingdom.”
Beyond the constitutional and ceremonial adjustments, the report revealed that the King paid £12.9 million in tax during the 2024–25 financial year, a figure that places him among the top 100 taxpayers in the country for that period.
Furthermore, it was announced that the King and Queen will not move their permanent residence to Buckingham Palace even after the ongoing £369 million reservicing and renovation program is completed.
A YouGov opinion poll published on Friday indicated that 66% of the British public support the decision not to relocate to the palace.
This is not the first time Buckingham Palace has revised the formal job description of the reigning monarch.
In 2022, near the end of Queen Elizabeth II’s reign, the Sovereign Grant redefined the role of the monarchy by removing a series of specific duties she “must fulfill,” delegating more responsibilities to the then-Prince of Wales.
That revision marked the first time in at least a decade that the late Queen’s official duties had been altered in the palace’s annual report, removing specific events—such as the State Opening of Parliament—that had previously been deemed mandatory under “constitutional convention.”
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