"We all have to agree on where our country stands and where our country wants to go in coming years," the conservative Merz told parliament, promising an "autumn of reforms".

Addressing Russia's war in Ukraine and Moscow's hostility towards NATO and the European Union, Merz, who has vastly stepped up German defence spending, said that "our freedom is being threatened".

Days after drones from Russia violated Polish airspace, Merz said that Russian President Vladimir Putin had long been "testing" Europe's and NATO's resilience.

"Russia wants to surreptitiously undermine our free democracy," he said. "We have to strengthen our capacity to resist and to defend ourselves."

Merz then turned to the "economic model under pressure" as Europe's export powerhouse has suffered in recent years, hit by higher energy prices following Russia's full-scale invasion of Ukraine.

It has also been battered by fierce Chinese competition, even before US President Donald Trump slapped the EU and other trading partners with new tariffs this year.

Public concern about immigration has meanwhile fuelled the rise of the far-right Alternative for Germany (AfD), stoked by a series of attacks carried out by migrants.

"Political forces at home and abroad are making our democracy contemptible and sowing discord," Merz said. "Our cohesion is openly being called into question."

Merz said that the autumn would be taken up with discussions on Germany's welfare state and forging "a new consensus" on how it should look, an issue that could spark tensions with his centre-left Social Democrat coalition partners.

"When it comes to pensions, we have to rethink the social contract between the generations," he said. "This reform of our welfare state stands before us."

Speaking before Merz took the podium, AfD co-leader Alice Weidel said "the autumn of reforms" heralded "empty words" and would "lead to a winter of still higher spending".

In a scathing critique, she accused Merz of undermining public safety by being lax on migration and of indulging "radical left" parties by not commenting on the killing of US conservative activist Charlie Kirk.

"The reason for your silence is obvious," she said. "For you, radical left parties like the Greens and the Linke count as part of the so-called political centre."