Wars and crises are draining our economies, our sense of security and our emotional wellbeing. They are affecting our daily lives: supply chains are becoming less reliable, energy prices are soaring, and trade dependencies on fossil-fuel energy and critical minerals pose risks to national security. Tariffs, industrial overcapacities and export restrictions threaten jobs and prosperity. Taken together, all this is exposing Europe’s weaknesses and vulnerabilities.
At the same time, we have shown how strengthening our alliances and our economic and military capacities can increase our scope for action. Forming a united European political front is helping to safeguard the sovereignty of Greenland, for instance. And despite all the recent turmoil, Europe remains one of the most attractive places in the world to live and work.
It is up to us to keep Europe strong. We decide – not the White House, not the Great Hall of the People and not the Kremlin. I want Germany and Europe, and for me that very much includes the UK as an integral ally and partner, to be strong enough that nobody can blackmail us. The solution is to become more sovereign, and to be clear, sovereignty is not nationalism.
Sovereignty is the precondition for political power and economic strength. But we can only enhance our sovereignty together, as Europeans. A strong and sovereign Europe can protect its citizens against threats, whether they come from within or abroad.
The German government is working on a reform agenda; not as an austerity programme but a sovereignty project. We need to reform Germany if we want to safeguard and enhance our European capacity to act.
As economic and military sovereignty is the priority focus in Germany, we have introduced a €500bn investment fund to modernise our infrastructure and invest in high-quality public goods. We have already reformed Germany’s debt brake to allow us to modernise and equip our military and enhance our engagement in Nato.
But as Europeans, we are not living up to our potential. We have world-class research and development but, way too often, start-ups founded in Europe relocate to the US because they cannot find the necessary capital to grow here. This is why I have been pushing to deepen the single European capital markets union.
In Germany, the system of
collective bargaining that connects unions, employers and the state in a “social contract” is a strategic advantage at times of crisis and reform. Together, we will carry a big responsibility in the months to come as we update our business model and renew our social contract. To make that effort pay off, we are seeking to introduce a tax reform that increases incomes for 95% of people, while asking the highest earners and the wealthiest individuals to contribute a bit more.
Germany has a part-time employment rate of nearly 40%, one of the highest in Europe. Almost one in two women work part-time. This is why the next priority is to reduce structural barriers to the labour market. Some of our existing tax and social spending measures, such as income-splitting for married couples, are disincentives. For a family with two children, it makes very little difference whether they earn €3,000 or €4,500 a month – the overall joint gross income remains the same, because of so-called benefit withdrawal rates.
In addition to structural reforms, we are investing in childcare infrastructure and expanding all our day schools to make life easier for families.
We will also bring forward an affordability agenda. This includes lowering the costs of energy, transport and rents, while improving childcare provision and education.
The Iran war shows, yet again, that we have to maintain a clear course in decarbonising our economies. We need more wind and solar power, we need to expand electricity storage facilities and we need to modernise our grids. Those who try to slow the energy transition or fantasise about a nuclear revival are a threat to Germany’s sovereignty.
Europe has to grow up, and show that it remains open for trade and cooperation. The recent EU trade agreements with Australia, the Mercosur countries and India show our strength. But if others don’t play by the rules, we should not be fools. To protect against unfair competition, Europe should implement local content requirements and “buy European” rules in strategic sectors. We should significantly enhance our investment protection rules to tie foreign takeovers to economic and technological added value in the EU.
Public representatives must take the lead. But companies also need to commit to Europe. I want managers to focus more on their local communities and employees than on short-term profit margins.
The pursuit of reforms at home and the building of alliances abroad are not separate agendas. They are the same bet: that democratic societies, when willing to be honest about their weaknesses and bold about change, can still set their own terms. Look at Hungary.
On 17 and 18 April, in Barcelona, progressive leaders from across the world will meet and together will place that bet – as leaders who refuse to cede our future to the nationalist right or to unaccountable markets.
The reforms I have outlined represent our German contribution to that wider effort to make 2026 a year of reform. Of course, action by Germany alone is only part of the solution – but a reformed, stronger Germany is a precondition for a strong Europe.
The answer to uncertainty is our own strength. Our strength secures our freedom. In short: strength is freedom. Sovereignty is not about building walls. It is about having the strength to keep them down.
