Germany's Conservatives and Social Democrats Present Coalition Agreement

Coalition Agreement Signals Strategic Shift

AuthorAuthor

Jannic Meyer & David Rösch
April 11, 2025

Welcome back 🇪🇺🇩🇪

In this issue, we welcome back our first-ever guest author, David Rösch PhD, Senior Associate from the leading European law firm Noerr, who provides his analysis of the new German coalition agreement. As the coalition government sets its agenda, defence and security feature prominently – reflecting the changing geopolitical realities across Europe.

David Rösch examines the coalition agreement’s defence priorities, from procurement reforms to regulatory changes affecting the sector. We trust you'll find his perspective insightful as we continue tracking developments in the European defence ecosystem.

Yours,
Uwe, Jack and Jannic

Germany’s Conservatives and Social Democrats presented their coalition agreement on 9 April, clearing another hurdle for forming a new government in May. The non-binding agreement sets out in broad terms what the incoming government hopes to achieve and, with the state of the world as it is, it comes as no surprise that defence and security figure prominently on the agenda. In addition to the standard German commitments to NATO and the EU, the agreement outlines several priorities for defence and security.

Simplify, standardise, scale – and spend more on defence

The new German government aims to standardise military equipment across European armed forces, making it simpler and more uniform. By placing orders collectively, they hope to negotiate better prices and higher quality. As for funding, the coalition parties wish to significantly increase Germany’s defence spending based on NATO capability goals (notably, without mentioning percentage targets).

To allow defence manufacturers to plan more effectively, the incoming government hopes to introduce a multi-year investment plan for defence that spans Germany's four-year terms. This will enable better financial planning for military procurement. In the immediate future, the government intends to accelerate military procurement by the end of the year. Specifically, the government wants to promote the integration of emerging technologies in the armed forces – including satellite systems, AI, unmanned combat vehicles, and hypersonic systems – which are prominently featured in the agreement.

Germany also doubles down on the Lithuania deployment, describing it as “our key contribution to deterrence and defence on NATO's eastern flank.“ This wording suggests Germany does not plan additional troop commitments in Central and Eastern Europe.

To ensure an adequate pool of trained personnel outside of active duty, Germany plans – at least for now – to introduce a new voluntary military service. Conscription was suspended in 2011, and with the German armed forces struggling to attract sufficient numbers of candidates, there are some questions surrounding the viability of this new model.

Some relief for Dual-Use, Defence Tech, and Military Goods

Dual-use goods, defence tech and military goods are among the most heavily regulated industries in Germany. This affects both investments in these industries and their day-to-day operations. The incoming government hopes to cut some red tape.

One issue that comes up time and again is export licences. To export your product from Germany (or from the EU for less sensitive items), you need a license – a process that takes time, as many companies discover when their products become stuck in customs. The incoming government plans to accelerate the authorisation process and reduce the number of instances where a licence is needed. We will see how that plays out, since licensing for dual-use goods is largely governed by EU law. Regarding military goods, the government aims to standardise regulations across EU member states.

Meanwhile, foreign investment in German defence companies and critical industries will continue to face regulatory oversight. This scrutiny is an important consideration when planning investments or exits in these sectors, as transactions may require notification to the German government and undergo formal review procedures.

The coalition agreement addresses several pressing issues facing German defence and security. However, the government's concrete actions remain to be seen – watch this space, as developments in this area are likely to bring some surprises.

Sources and further reading

News That Caught Our Attention 👀

  • China hits back with steep tariffs as U.S.-China trade war escalates after Trump’s latest move. The Guardian

  • EU pauses planned tariffs for 90 days after Trump halts new duties, opening a window for talks. The New York Times

  • Zelensky claims 155 Chinese citizens are fighting for Russia in Ukraine, urging global response as Beijing denies official involvement. ​BBC

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European Resilience Tech Newsletter Team

Uwe Horstmann co-founded Project A Ventures in 2012 as General Partner and has built Project A to be a leading European early-stage investor with over $1bn USD under management and having backed 100+ founders. In addition to Project A, Uwe serves as Reserve Officer in the German armed forces and advises the German Ministry of Defence in digital transformation issues.

Jack Wang is a software engineer turned product-driven tech investor and joined Project A in 2021 to lead the firm’s deep tech investing, which has grown to include DefenceTech. Prior to joining Project A, Jack worked in a variety of organisations such as Amazon and Macquarie Group across Australia, US and UK / Europe. Jack holds a MBA from London Business School and Bachelors of Engineering (Bioinformatics, 1st) from UNSW, Australia.

Jannic Meyer joined Project A initially contributing to what is now known as the Project A Studio, partnering with founders at the pre-idea stage, where he covered a variety of topics ranging from energy infrastructure to dual-use robotics and led our investment in ARX Robotics. He is now part of the investment team at Project A covering all things resilience.

Project A Ventures is one of the leading early-stage tech investors in Europe with offices in Berlin and London. In addition to 1 billion USD assets under management, Project A supports its 100+ portfolio companies with a platform team over 140 functional experts in key areas such as software and product development, business intelligence, brand, design, marketing, sales and recruiting. Project A have backed founders of Trade Republic, WorldRemit, Sennder, KRY, Spryker, Catawiki, Unmind and Voi as well as founders building in European Resilience: