The ILA Berlin Air Show, which opened in 2025 amid the FCAS collapse and Iran war, returned in 2026 with record participation and a booming defense sector. The 2026 edition set records with over 750 exhibitors from 37 countries, driven by global conflicts. Germany's defense budget reached €108 billion for 2026. The show emphasized unmanned systems, drones, and AI applications, with startups like Quantum Systems, Helsing, and Stark Defense winning major contracts. Chancellor Friedrich Merz unveiled a new aviation strategy designating aerospace as a key strategic sector. Environmental groups criticized the strategy for insufficient climate measures.

Rheinmetall CEO Armin Papperger warned that France may withdraw from the Main Ground Combat System (MGCS) tank project, citing potential French budget cuts to less than half of planned levels. The project, already behind schedule, aims to replace Leopard 2 and Leclerc tanks around 2040. This follows the collapse of the Franco-German FCAS fighter jet program.

A study by the German Economic Institute (IW) projects that the retirement of the baby boomer generation will leave a labor shortfall of over 4 million workers by 2036, 1.3 million more than previously estimated. The institute attributes the larger gap to declining birth rates, reduced immigration due to government policy, and economic weakness. It urges the current legislative period as the last chance to mitigate the impact through increased labor participation, skilled migration, and tax relief.

Germany missed the June 7 deadline to implement the EU Pay Transparency Directive, which aims to enforce equal pay for equal work. The German government's proposed bill, approved on May 6, is considered insufficient by the European Commission because it does not fully meet the directive's requirements on transparency, burden of proof, and employer obligations. Germany could face infringement proceedings and potential fines, similar to a €34 million penalty for failing to implement the EU Whistleblower Protection Directive.

Background: German state interior ministers previously warned about security risks of a potential AfD-led government in Saxony-Anhalt. Now, senior CDU politicians, including Dennis Radtke, Dennis Thering, Johann Wadephul, Karl-Josef Laumann, and Herbert Reul, have publicly warned against any form of cooperation with the far-right AfD ahead of state elections in Saxony-Anhalt, Mecklenburg-Vorpommern, and Berlin. The warnings follow a photo of CDU faction leader Guido Heuer appearing friendly with AfD candidate Ulrich Siegmund, which Heuer dismissed as a misrepresentation. CDU figures argue that working with the AfD would destroy the party and undermine Germany's commitment to Europe, NATO, and the West. The CDU has a party congress resolution excluding coalitions with the AfD and the Left, but election outcomes may pressure the party to reconsider.