Germany's Federal Employment Agency (BA) is on course for a deficit of more than 8 billion euros this year and cumulative debt of about 23 billion euros by 2030, according to a report prepared for the Bundestag budget committee and seen by Reuters. A weaker labour market -- higher average unemployment feeding higher jobless-benefit payouts -- is driving the shortfall, which the agency would have to cover with federal loans unless the unemployment-insurance contribution rate rises. BA chief Andrea Nahles said the hoped-for spring recovery had "not really got going."

Real wages in the euro zone have fallen for the first time in three years, as May inflation hit 3.2% year-on-year, outpacing an expected 2.6% rise in negotiated wages, Eurostat and ECB data showed on Tuesday. The decline, also seen in the United States and the United Kingdom, comes as households were still recovering from the 2022-2023 inflation shock. In the third quarter of 2025, only half of OECD countries had regained their end-2021 average wage levels, with euro zone pay still 2% below that benchmark.

Germany's poverty rate rose to 16.1% in 2025, a new record, with 13.34 million people affected, according to the Paritätischer Wohlfahrtsverband. The charity warned of a 'crisis-like situation' and urged the government not to cut social benefits. Opposition parties and a CDU social politician criticized the government's austerity plans.

The EU has cleared the way for deportation centers in third countries for rejected asylum seekers, with sanctions for non-cooperation. Meanwhile, the article criticizes Germany's liberalized citizenship law under the previous government, which allows dual citizenship, arguing it weakens social cohesion and loyalty. It calls for a clearer commitment from new citizens to Germany as their own country.

The European Commission has formally assessed Germany's reintroduction of internal border controls with neighboring states, introduced in November 2024 and extended until September 2025, as insufficiently justified and disproportionate. It criticized late notifications, lack of detailed risk assessments, and failure to explain why controls were applied uniformly at all land borders, urging Germany to transition to targeted, risk-based checks. Similar assessments were issued for eight other EU states. The Commission linked its criticism to the upcoming entry into force of the EU's new migration and asylum pact in June 2026, which it hopes will address underlying concerns. German Interior Minister Alexander Dobrindt (CSU) had recently tightened the controls, including directing federal police to reject asylum seekers at land borders, a practice the Commission flagged as raising legal and security concerns.

Berlin's domestic intelligence agency (Verfassungsschutz) released its 2025 report, revealing an increase in extremists across all ideological categories from 9,370 to 9,720. Left-wing extremism saw the largest rise to 3,950 individuals, linked to an eco-anarchist ideology that fueled a major arson attack on the power grid in September 2025, cutting power to tens of thousands. Right-wing extremism grew to 1,480, driven by violent online networks. Islamist extremism rose to 2,590, and foreign-ideology extremism to 1,700. Interior Senator Iris Spranger highlighted left-wing extremism as having the most severe consequences recently.

Background: Russian President Vladimir Putin's adviser Anton Kobyakov invited German AfD lawmakers Markus Frohnmaier and Steffen Kotré to the St. Petersburg International Economic Forum in June 2025. German politicians from CDU, SPD, and Greens have publicly condemned the AfD delegation's participation as a security risk, warning that Russian intelligence services use such events for information gathering and recruitment. The AfD defended the trip as maintaining diplomatic channels. The forum, boycotted by German officials since Russia's 2022 invasion of Ukraine, is also seeing renewed participation from some German business representatives.

A Kiel Institute analysis finds that four years after Chancellor Scholz's 'Zeitenwende' speech, German military procurement remains flawed. Germany buys over 60% of equipment from domestic firms, neglecting European alternatives, and fails to invest in new paradigm systems like drones, AI, and electronic warfare. The defense strategy lacks a European dimension, omitting France, the UK, and Poland. Delivery timelines are unclear, with a rising share of orders lacking final delivery dates.