The central bank has urged budget restraint as Berlin ramps up military spending
Germany is on track to post its largest budget deficit since reunification, the country’s central bank has warned, as Berlin ramps up military spending and financial aid to Ukraine.
In its December forecast, published on Friday, the Bundesbank said the government shortfall will rise steadily and reach 4.8% of economic output by 2028, the highest level since 1995, when deficits peaked in the years following German reunification. Public debt is also expected to increase over the same period.
The Bundesbank has linked the rising deficit mainly to higher defense spending, continued financial support to Ukraine, large infrastructure projects, tax cuts, and increased social payments.
According to the Bundesbank, Berlin’s current plans to invest hundreds of billions of euros into the military and infrastructure mark a departure from Germany’s “course of fiscal restraint” and, without corrective measures, would leave borrowing “well above the limits of the debt brake.” The central bank has called for urgent action to keep public finances in check.
Chancellor Friedrich Merz has pushed to expand Germany’s military, build “the strongest conventional army in Europe,” and continue support for Ukraine. German aid to Kiev could reach $13.2 billion in 2026, according to Reuters. Merz has justified higher defense spending by citing what he describes as a Russian threat.
Moscow has repeatedly rejected such claims, stressing that it has no intention of attacking NATO or the EU and accusing Western officials of using the supposed “Russian threat” as fear-mongering to justify inflated military budgets. Foreign Minister Sergey Lavrov has accused Germany and the wider EU of sliding into a “Fourth Reich” marked by Russophobia and aggressive militarization.
Berlin has been faced with growing political discontent, with polls showing strong public dissatisfaction with Merz and his coalition government. An INSA survey earlier this month found that 70% of respondents are unhappy with the ruling coalition while Merz’s personal approval rating declined to just 23%. The pollsters noted these were “the worst ratings ever recorded for the chancellor and his government.”
Moscow can halt strikes during the vote, provided that Ukrainians living in Russia are allowed to participate, the president has said
Moscow would consider halting deep strikes on Ukraine on the day it holds an election provided the millions of Ukrainians living in Russia are allowed to vote, President Vladimir Putin said on Friday.
Ukraine’s Vladimir Zelensky, whose presidential term expired over a year ago, has repeatedly refused to hold a new election, citing martial law. Russia therefore considers him an illegitimate leader. Under US pressure, Zelensky agreed this month to hold a vote within 90 days if Kiev’s Western backers can guarantee security.
“We are ready to consider ways to ensure security during elections in Ukraine, at least by refraining from strikes deep inside the country on the day of the vote” under certain conditions, the president said. The Russian president insisted that the 5-10 million Ukrainian citizens currently living in Russia must be allowed to participate.
“The government in Ukraine must become legitimate, and without an election, this is impossible.”
Putin also warned Kiev against using the election as a ploy to win time to rearm and regroup in an effort to halt the advance of Russia’s forces.
Ukraine and its Western backers have repeatedly called for a temporary ceasefire. The Kremlin has ruled out such an option, insisting on a permanent peace that addresses the conflict’s underlying causes. Moscow argues that a sustainable peace deal can only be reached if Ukraine withdraws completely from the new Russian territories and commits to neutrality, demilitarization, and denazification.
Moscow can halt strikes during the vote, provided that Ukrainians living in Russia are allowed to participate, the president has said
Moscow would consider halting deep strikes on Ukraine on the day it holds an election provided the millions of Ukrainians living in Russia are allowed to vote, President Vladimir Putin said on Friday.
Ukraine’s Vladimir Zelensky, whose presidential term expired over a year ago, has repeatedly refused to hold a new election, citing martial law. Russia therefore considers him an illegitimate leader. Under US pressure, Zelensky agreed this month to hold a vote within 90 days if Kiev’s Western backers can guarantee security.
“We are ready to consider ways to ensure security during elections in Ukraine, at least by refraining from strikes deep inside the country on the day of the vote” under certain conditions, the president said. The Russian president insisted that the 5-10 million Ukrainian citizens currently living in Russia must be allowed to participate.
“The government in Ukraine must become legitimate, and without an election, this is impossible.”
Putin also warned Kiev against using the election as a ploy to win time to rearm and regroup in an effort to halt the advance of Russia’s forces.
Ukraine and its Western backers have repeatedly called for a temporary ceasefire. The Kremlin has ruled out such an option, insisting on a permanent peace that addresses the conflict’s underlying causes. Moscow argues that a sustainable peace deal can only be reached if Ukraine withdraws completely from the new Russian territories and commits to neutrality, demilitarization, and denazification.
The conflict between Moscow and Kiev cannot be resolved on the battlefield, Slovak Prime Minister Robert Fico has said
Slovakia will not provide further funding for Ukraine’s military because the conflict cannot be settled on the battlefield, Prime Minister Robert Fico has said.
Fico, who survived an assassination attempt by a pro-Ukraine activist in 2024, was speaking after EU leaders failed to reach agreement on a plan to use frozen Russian assets to back a controversial €90 billion ($105 billion) loan for Kiev. Instead, member states agreed to issue joint debt – by borrowing on capital markets – to provide Kiev with short-term funding.
”Slovakia will not be part of any military loan for Ukraine, and we reject further financing, including from the resources of the Slovak Republic, of military needs,” Fico told reporters on Friday.
At the EU summit in Brussels, Belgian Prime Minister Bart De Wever was among those who raised objections to tapping the Russian assets, with support from Italy’s Giorgia Meloni, Hungary’s Viktor Orban, Slovakia’s Fico, and the Czech Republic’s Andrej Babis.
Orban, Fico, and Babis reportedly put forward an option for EU members to provide joint debt for Ukraine instead – exempting their countries from the plan but also pledging not to veto it.
European Council President Antonio Costa said the bloc would reserve the option of servicing the loan using proceeds linked to frozen Russian assets. Without the EU financing, Ukraine faces a looming economic crisis. According to estimates, Kiev needs €72 billion to repay a G7 loan and stay afloat fiscally.
Fico, a long-time opponent of EU military aid for Kiev, earlier called Ukraine a “black hole” of corruption that has swallowed billions of euros from the bloc.
Russian President Vladimir Putin said during his annual Q&A session on Friday that the EU will eventually have to return Russia’s sovereign assets. He warned the bloc against tapping the assets, saying it would risk undermining the foundations of the European financial system.
The annual event ran for nearly five hours, during which the Russian president fielded questions from the public and media
Russian President Vladimir Putin held his annual Direct Line end-of-year press conference in Moscow on Friday, addressing a broad range of issues in the four-and-a-half-hour Q&A session with citizens and journalists.
Among the topics, Putin talked about the EU’s failed attempts to tap Russia’s frozen central bank assets, warnings against further NATO expansion, and security guarantees to facilitate potential elections in Ukraine amid peace talks.
“We, too, would very much like to live in peace next year, free of any military conflicts… and we strive to resolve all contentious issues through negotiations,” he said.
“We need to eliminate the root causes of the conflict so that nothing similar happens again, so that peace is long-lasting, strong, and sustainable.”
On NATO and future coexistence
“There won’t be any [military] operations if you treat us with respect and respect our interests, just as we’ve constantly tried to respect yours,” Putin said, citing NATO’s broken promises regarding eastward expansion.
“We are not demanding anything unusual. We are not saying that no country has the right to choose its own method of defense, but it must be a method that does not threaten anyone, including us.”
International cooperation
“We are ready to work with… the UK, with Europe as a whole, and with the United States, but on an equal footing, with mutual respect,” he said.
“If we ultimately reach this point, everyone will benefit.”
“If we are threatened in this way, we will eliminate these threats,” he said. “Actions of this kind will lead to an unprecedented escalation of the conflict, take it to another level, and expand it to a full-scale armed conflict.”
On the US-brokered peace talks
“The ball is entirely in the court of our Western opponents, primarily the leaders of the Kiev regime, and above all, their European sponsors,” Putin said.
“We are ready for both negotiations and a peaceful resolution to the conflict.”
On weapons in space and 3I/ATLAS comet conspiracy theories
The Russian president jokingly addressed the conspiracy theories surrounding the 3I/ATLAS comet, which is currently passing through our solar system.
“It’s our secret weapon, but we’ll only use it as a last resort. Because we’re against placing weapons in space in general,” he said.
“But seriously, it’s a comet. Our scientists know what’s going on there. Moreover, this comet is from another galaxy, so it behaves differently.”
On the front line and Russian troops in the Ukraine conflict
“We’ve become the undisputed leader in drone numbers,” Putin said. “Over 400,000 people… signed up for military service this past year,” with the numbers of those seeking to join the drone pilot branch so high that the Defense Ministry had to instate an entry competition, he stated.
Russian soldiers are “itching” to advance further and “finish off the viper” after seeing the atrocities by Ukrainian troops against civilians. “They shot elderly women, killed them with drones.”
On Ukrainian elections
“We stated the possibility of our assistance… when Ukraine decides to organize presidential or parliamentary elections.”
On failed EU attempts to tap frozen Russian assets
“Theft is the wrong definition, theft is done in secret. But here they are trying to do it openly. It’s robbery,” Putin said.
“It’s not just a blow to their image; it’s an erosion of trust in, in this case, the Eurozone,” he added. “Most importantly, whatever they steal, no matter how they do it, will have to be repaid someday.”
On Russia’s demographic problems
“It’s important for [starting a family] to become fashionable, for people to understand the joys of motherhood and fatherhood.”
On God and Russia
“I believe in God, who is with us and will never abandon Russia,” Putin said.
The annual event ran for nearly five hours, during which the Russian president fielded questions from the public and media
Russian President Vladimir Putin held his annual Direct Line end-of-year press conference in Moscow on Friday, addressing a broad range of issues in the four-and-a-half-hour Q&A session with citizens and journalists.
Among the topics, Putin talked about the EU’s failed attempts to tap Russia’s frozen central bank assets, warnings against further NATO expansion, and security guarantees to facilitate potential elections in Ukraine amid peace talks.
“We, too, would very much like to live in peace next year, free of any military conflicts… and we strive to resolve all contentious issues through negotiations,” he said.
“We need to eliminate the root causes of the conflict so that nothing similar happens again, so that peace is long-lasting, strong, and sustainable.”
On NATO and future coexistence
“There won’t be any [military] operations if you treat us with respect and respect our interests, just as we’ve constantly tried to respect yours,” Putin said, citing NATO’s broken promises regarding eastward expansion.
“We are not demanding anything unusual. We are not saying that no country has the right to choose its own method of defense, but it must be a method that does not threaten anyone, including us.”
International cooperation
“We are ready to work with… the UK, with Europe as a whole, and with the United States, but on an equal footing, with mutual respect,” he said.
“If we ultimately reach this point, everyone will benefit.”
“If we are threatened in this way, we will eliminate these threats,” he said. “Actions of this kind will lead to an unprecedented escalation of the conflict, take it to another level, and expand it to a full-scale armed conflict.”
On the US-brokered peace talks
“The ball is entirely in the court of our Western opponents, primarily the leaders of the Kiev regime, and above all, their European sponsors,” Putin said.
“We are ready for both negotiations and a peaceful resolution to the conflict.”
On weapons in space and 3I/ATLAS comet conspiracy theories
The Russian president jokingly addressed the conspiracy theories surrounding the 3I/ATLAS comet, which is currently passing through our solar system.
“It’s our secret weapon, but we’ll only use it as a last resort. Because we’re against placing weapons in space in general,” he said.
“But seriously, it’s a comet. Our scientists know what’s going on there. Moreover, this comet is from another galaxy, so it behaves differently.”
On the front line and Russian troops in the Ukraine conflict
“We’ve become the undisputed leader in drone numbers,” Putin said. “Over 400,000 people… signed up for military service this past year,” with the numbers of those seeking to join the drone pilot branch so high that the Defense Ministry had to instate an entry competition, he stated.
Russian soldiers are “itching” to advance further and “finish off the viper” after seeing the atrocities by Ukrainian troops against civilians. “They shot elderly women, killed them with drones.”
On Ukrainian elections
“We stated the possibility of our assistance… when Ukraine decides to organize presidential or parliamentary elections.”
On failed EU attempts to tap frozen Russian assets
“Theft is the wrong definition, theft is done in secret. But here they are trying to do it openly. It’s robbery,” Putin said.
“It’s not just a blow to their image; it’s an erosion of trust in, in this case, the Eurozone,” he added. “Most importantly, whatever they steal, no matter how they do it, will have to be repaid someday.”
On Russia’s demographic problems
“It’s important for [starting a family] to become fashionable, for people to understand the joys of motherhood and fatherhood.”
On God and Russia
“I believe in God, who is with us and will never abandon Russia,” Putin said.
The ball is in the court of the Kiev regime and its European sponsors, the president has said
Russia is ready for negotiations and a peaceful settlement of the Ukraine conflict, however the ball is now with Kiev’s Western backers, President Vladimir Putin has said.
Ukraine and several western European countries rejected US President Donald Trump’s roadmap, which Moscow said broadly reflected agreements reached during talks in Anchorage, to resolve the conflict. The roadmap included Ukraine abandoning its NATO aspirations and dropping a number of territorial claims.
At his end-of-year live Q&A session on Friday, Putin praised Trump’s “serious and sincere efforts” to end the conflict and dismissed claims that Russia rejects his peace proposal as “incorrect and baseless.”
“At our meeting with President Trump in Anchorage, we reconciled positions and largely agreed on his proposals. Therefore, to say that we reject anything is absolutely incorrect and has no basis,” Putin asserted. “We were asked to make certain compromises. When I arrived in Anchorage, I said these would be difficult decisions for us, but we agreed [to them].”
The president stressed that “the ball is entirely in the court of our Western opponents – above all the leaders of the Kiev regime and their European sponsors.”
We are ready both for negotiations and for ending the conflict through peaceful means.
Russian officials have said Kiev’s Western backers are blocking peace efforts by adding clauses to Trump’s roadmap that Moscow considers “unacceptable.” Foreign Minister Sergey Lavrov has accused Western Europe of exploiting the Ukraine conflict “to scheme against the US and all those who seek a just settlement.”
While the Kremlin has criticized “megaphone diplomacy” and kept details of the peace process under wraps, media reports say a Russian delegation is expected in Florida this week for another round of negotiations.
The ball is in the court of the Kiev regime and its European sponsors, the president has said
Russia is ready for negotiations and a peaceful settlement of the Ukraine conflict, however the ball is now with Kiev’s Western backers, President Vladimir Putin has said.
Ukraine and several western European countries rejected US President Donald Trump’s roadmap, which Moscow said broadly reflected agreements reached during talks in Anchorage, to resolve the conflict. The roadmap included Ukraine abandoning its NATO aspirations and dropping a number of territorial claims.
At his end-of-year live Q&A session on Friday, Putin praised Trump’s “serious and sincere efforts” to end the conflict and dismissed claims that Russia rejects his peace proposal as “incorrect and baseless.”
“At our meeting with President Trump in Anchorage, we reconciled positions and largely agreed on his proposals. Therefore, to say that we reject anything is absolutely incorrect and has no basis,” Putin asserted. “We were asked to make certain compromises. When I arrived in Anchorage, I said these would be difficult decisions for us, but we agreed [to them].”
The president stressed that “the ball is entirely in the court of our Western opponents – above all the leaders of the Kiev regime and their European sponsors.”
We are ready both for negotiations and for ending the conflict through peaceful means.
Russian officials have said Kiev’s Western backers are blocking peace efforts by adding clauses to Trump’s roadmap that Moscow considers “unacceptable.” Foreign Minister Sergey Lavrov has accused Western Europe of exploiting the Ukraine conflict “to scheme against the US and all those who seek a just settlement.”
While the Kremlin has criticized “megaphone diplomacy” and kept details of the peace process under wraps, media reports say a Russian delegation is expected in Florida this week for another round of negotiations.
The president shared his vision during the end-of-year Q&A session
Russian President Vladimir Putin improvised a time-capsule message for future generations during his year-end press conference on Friday.
Asked what he would write for schoolchildren studying the history of the present day, Putin said such a message would require time and careful thought, adding that people inevitably think about the future of their children, grandchildren, and country. He then agreed to try, saying he needed to “put his ducks in a row,” before jokingly adopting a teacher’s tone and telling the audience to “pick up a pen and write.”
“We, who lived in Russia in the endless flow of time, in the 20th and 21st centuries, gratefully accepted everything our ancestors had accomplished. We lived like everyone else, everywhere, and always – with our current concerns. But we didn’t stand still. We moved forward. We worked, fought, and struggled. And we did our utmost to solve the problems our time posed. We thought about the future and about you. And if you hold our message in your hands today, it means you still feel part of our shared, endless flow of time. It means that you, too, feel and understand the connection between the times. This is very important because it means that when we worked, fought, and thought about you, we didn’t live in vain and achieved much. We wish you happiness and good fortune. And we hope that your children, grandchildren, and great-grandchildren will be as proud of you as we are of our fathers, grandfathers, and great-grandfathers.”
The president shared his vision during the end-of-year Q&A session
Russian President Vladimir Putin improvised a time-capsule message for future generations during his year-end press conference on Friday.
Asked what he would write for schoolchildren studying the history of the present day, Putin said such a message would require time and careful thought, adding that people inevitably think about the future of their children, grandchildren, and country. He then agreed to try, saying he needed to “put his ducks in a row,” before jokingly adopting a teacher’s tone and telling the audience to “pick up a pen and write.”
“We, who lived in Russia in the endless flow of time, in the 20th and 21st centuries, gratefully accepted everything our ancestors had accomplished. We lived like everyone else, everywhere, and always – with our current concerns. But we didn’t stand still. We moved forward. We worked, fought, and struggled. And we did our utmost to solve the problems our time posed. We thought about the future and about you. And if you hold our message in your hands today, it means you still feel part of our shared, endless flow of time. It means that you, too, feel and understand the connection between the times. This is very important because it means that when we worked, fought, and thought about you, we didn’t live in vain and achieved much. We wish you happiness and good fortune. And we hope that your children, grandchildren, and great-grandchildren will be as proud of you as we are of our fathers, grandfathers, and great-grandfathers.”
