BERLIN (BLOOMBERG, DPA) - German Chancellor Angela Merkel unexpectedly picked Ms Annegret Kramp-Karrenbauer to succeed Ms Ursula von der Leyen as Defence Minister, handing the head of Germany's Christian Democrats a difficult portfolio as she seeks to develop her bid to become chancellor after Dr Merkel's term ends.

Dr Merkel, who has said she intends to remain in charge until the next scheduled election in 2021, moved quickly to replace Ms von der Leyen, whose nomination as the next president of the European Commission was approved by the bloc's parliament on Tuesday (July 16).

Ms Kramp-Karrenbauer's surprise switch to the Defence Ministry was confirmed by the government and the Christian Democratic Union (CDU) party.

The 56-year-old, known in Germany as AKK, inherits a job considered something of a poisoned chalice. Critics say the country's armed forces are chronically underfunded. They have been plagued by allegations of inefficiency and reports of faulty equipment, with helicopters that cannot fly and submarines unable to sail.

Germany has been a regular target of calls by President Donald Trump for US allies to boost funding for the military. Dr Merkel has stood by a NATO-sponsored target of spending 2 per cent of gross domestic product on defence, even if it takes longer to get there than the United States wants.

However, officials in the Social Democratic Party - Dr Merkel's junior coalition partner which controls the Finance Ministry - say the 2 per cent target is an arbitrary distraction that they have no intention of implementing.

Meanwhile, Dr Merkel marked her 65th birthday on Wednesday (July 17) but she is not expected to make much of the milestone. She will lead a weekly Cabinet meeting on Wednesday.

"That means you're not getting any younger. But more experienced maybe," Dr Merkel said last week when asked about her birthday.