At a summit in Brussels on Thursday, Merz emphasized the risks posed by Europe’s growing debt levels. “We must always keep this danger in mind,” Merz stated, stressing that the situation was unsustainable. Debt levels for European governments, corporations, and private households have reached all-time highs, increasing the vulnerability of the EU to financial instability.

Concerns Over U.S. Economic Policy

Leaders also discussed the implications of U.S. fiscal policies, particularly the ongoing tax cuts under Donald Trump. The cuts have created market volatility, contributing to a stronger dollar and rising long-term borrowing costs. EU leaders are worried about how these policies could trigger global financial turmoil and further strain Europe’s public finances.

Merz’s Investment Plan and Fiscal Worries

Despite his traditionally fiscally conservative stance, Merz has proposed a significant investment package that could add up to €1 trillion, which has raised concerns about further increasing Europe’s sovereign debt. The package aims to modernize Germany’s infrastructure and military but has been met with caution from fiscal conservatives within his own party and neighboring EU countries like the Netherlands and Austria.