Leaders of the E5 group (UK, France, Germany, Italy, Poland) will meet in Berlin on Wednesday to improve coordination for supporting Ukraine against the Russian invasion. The meeting follows a G7 summit where leaders agreed to increase air defense deliveries and sanctions against Russia. NATO chief Mark Rutte will join via video link. The meeting also covers preparations for the NATO summit in Ankara on July 7-8. Ukrainian President Zelensky has called for Europe to do more as US efforts to end the fighting have faded. EU chief Antonio Costa's office has made brief diplomatic contacts with Moscow, though some EU states are wary.

Germany's economy grew 0.3% in Q1 2026 amid Iran war headwinds, with unemployment above 3 million and Volkswagen profit down 28.4%. The Federation of German Industries (BDI) cut its 2026 growth forecast from 1.0% to 0.4%, citing lingering effects of the Iran war despite a recent Iran-US deal. BDI also revised eurozone growth to 1.1% and global growth to 2.9%. BDI President Peter Leibinger warned of continued job losses without stronger growth and called for tax relief, better depreciation rules, and innovation incentives. He cautioned against broad EU protective tariffs on China, arguing they would harm Germany's export-oriented economy.

German municipalities have been warning of a deepening fiscal crisis, with 95% of those over 50,000 residents expecting unbalanced budgets in 2026. Municipal associations now project annual deficits of nearly €30 billion through 2028, citing rising costs from federal and state mandates, depleted reserves, and increasing interest payments. They specifically blame unfunded mandates in social security, healthcare, and pension reforms, and call for structural reforms to treat municipalities as equal partners. An action day is planned to highlight the crisis ahead of a meeting between Chancellor Friedrich Merz and state premiers.

German Defense Minister Boris Pistorius blamed US President Donald Trump for the crisis in the Strait of Hormuz, stating Trump 'pushed the cork into the strait.' He noted that a German military mission to secure shipping requires consent from Iran and Oman and cautioned that parliamentary approval from the Bundestag is unlikely before the summer recess due to uncertainty over US-Iran negotiations and the need for an international framework.

German Defense Minister Boris Pistorius stated during a visit to Lithuania that he may issue compulsory assignments to fill remaining positions in the Bundeswehr brigade being stationed in Lithuania, as voluntary enlistments may not cover all 4,800 needed troops. The brigade, aimed at strengthening NATO's eastern flank against Russia, is on track for full operational capability by 2027. Pistorius met his Lithuanian counterpart and observed Exercise Freedom Shield 2026 near the Belarus border. This marks the first permanent deployment of a major German combat unit abroad.

The German government plans to allow up to four additional Taliban consular staff into Germany to process passports for increased deportations of Afghan nationals. The move follows an agreement to conduct up to three charter flights per month for deportations. The decision has drawn criticism from the Greens, who accuse the government of compromising foreign policy principles. Separately, Chancellor Friedrich Merz pledged relief for municipalities, and Germany reached a deal with France on a KNDS defense stake.

Estonia has taken delivery of its first German-made IRIS-T medium-range air defense system at Ämari Air Base, marking a significant upgrade to its air defense capabilities. The system, manufactured by Diehl Defence, allows Estonia to counter aerial threats at greater ranges and altitudes than its previous short-range systems. The purchase was coordinated with neighboring Latvia, and Estonia plans to receive two more units next year. The deal is described as the largest defense investment in Estonia's history, driven by security concerns over Russia's war in Ukraine.

Germany is experiencing an intense heatwave with temperatures potentially reaching 40°C. Defense Minister Boris Pistorius, speaking at NATO exercises in Lithuania, called for an orderly military transition as the US reduces its European posture and confirmed Germany's 4,800-soldier brigade in Lithuania will be fully operational by 2027. Chancellor Friedrich Merz addressed defamation laws, stating he is open to reforming protections for state institutions. Local governments warned of 'exploding mountains of debt' with a projected €29.7 billion deficit.