Berlin, Apr. 9, (dpa/GNA) – The next German governing coalition was formally unveiled in Berlin on Wednesday, paving the way for a new administration under conservative leader Friedrich Merz.
“The future government, the future coalition, will reform and invest in order to keep Germany stable, make it more secure and stronger again economically,” said Merz, who is set to become chancellor of Europe’s largest economy for a four-year term, succeeding Olaf Scholz.
Merz’s centre-right bloc – made up of the Christian Democrats (CDU) and the Christian Social Union (CSU) – reached the deal with the Social Democratic Party (SPD) after weeks of arduous negotiations since February’s parliamentary elections.
The agreement comes at a crucial time for Germany, with the country’s export-based economy already struggling with two consecutive years of recession, and set to be hit hard by US tariffs of 20% on all goods from the European Union and further duties on the key German automotive industry.
Coalition deal sends ‘clear signal’
Party leaders announced the agreement at a press conference in Berlin on Wednesday afternoon.
Running to more than 100 pages, the deal includes cuts to social spending, bureaucracy and development programmes, but also plans for a €15 ($16.50) per hour minimum wage and for a National Security Council to streamline decision-making on defence.
“We have a strong plan to move our country forward together again,” said Merz, calling the deal a “clear signal” to Germany’s citizens and partners in the European Union that the country’s next government will be capable of taking action.
Aside from the many economic challenges facing the incoming government, Merz’s administration will also face a continuing threat from Russia amid indications of waning US support for Ukraine.
And the rise of the far-right Alternative for Germany (AfD) is sure to prove a massive challenge at home, with an Ipsos poll on Wednesday putting the AfD in first place for the first time.
Merz said the deal would provide a “very good basis” to combat the AfD by proving that centrist politicians are able to not only describe but also to resolve the issues facing citizens.
CSU leader Markus Söder – whose party put up candidates in Bavaria only – said the deal showed “Germany is not defenceless,” while SPD co-leader Lars Klingbeil added that “it’s not about changing everything – but it is about changing the right things.”
Fellow SPD co-leader Saskia Esken summarized the coalition’s goals as “social cohesion in our country, the strengthening of our democracy, the restoration of a European peace order.”
Merz still has a number of weeks to wait before he can replace Scholz as chancellor, as the coalition agreement must first be approved by the three parties.
The SPD rank and file are to vote on the deal in an online members’ ballot, and it must also be passed by top CDU representatives at a party conference and by the CSU steering committee.
While Merz repeatedly stated his wish for a government to be in place by Easter, he now hopes to “be able to get to work with a new federal government at the beginning of May.”
Deal ends weeks of negotiations
February’s election, which followed the collapse of Scholz’s three-way coalition late last year, saw the CDU/CSU bloc finish top on 28.5%, ahead of the AfD in second and the SPD in third.
The result left the CDU/CSU and SPD jointly holding a narrow majority of seats in the new Bundestag, Germany’s lower house of parliament.
With all mainstream parties ruling out cooperation with the AfD, no other two-way coalition was viable, piling the pressure on the centre-right CDU/CSU to join its historic rival.
The prospective coalition partners achieved a stunning breakthrough early on in the talks when they agreed to reform strict constitutional rules on government borrowing in order to finance a hike in spending on defence, and a €500 billion ($550 billion) package for infrastructure and action on climate change.
The move was seen as a response to extraordinary developments on the international stage, including the fiery White House meeting between President Donald Trump and his Ukrainian counterpart Volodymyr Zelensky.
With the major question of how to finance further spending resolved, the CDU/CSU and SPD spent weeks negotiating on the finer details of the coalition agreement, leading to open frustration from business leaders.
The wait was also accompanied by a noticeable uptick in support for the AfD in opinion polls, culminating in Wednesday’s landmark survey.
Further impetus to reach a deal was added last week by Trump’s unprecedented tariff announcements, as German markets joined a global sell-off in response.
Key plans announced
The coalition agreement spans a wide range of plans to boost the German economy, strengthen defence and cut social spending.
Among the key measures to be announced were a €15 minimum wage by 2026, a reform to unemployment benefit, a pledge to maintain pension levels and a €1 billion cut in spending on development programmes.
The deal includes tax breaks for companies’ investments, measures to encourage more start-ups, a subsidy for industrial energy prices, scrapping a German supply chain law and introducing a €100 billion fund to encourage investment.
The agreement does not include a return to nuclear power, but it does include subsidies for electric vehicles.
The coalition plans to create a National Security Council in the Chancellery to streamline decision-making on foreign and security policy, and to introduce a revamped voluntary model for military service.
Germany’s relationship with the United States remains “of paramount importance,” the text said, describing the trans-Atlantic partnership as “a great success story for both sides, which must continue under new conditions.”
On the issue of citizenship, the agreement sets out to overturn a reform by the previous administration that allowed people to gain German nationality after just three years of residence in exceptional cases, but maintains the possibility of double nationality.
The agreement pledges to turn back migrants at Germany’s borders even if they have a claim to asylum, while refugees with limited protection status are no longer allowed to bring family members to Germany for an initial period of two years, and Ukrainian nationals arriving in the country are to no longer automatically have the right to claim unemployment benefits.
A national public transport subsidy – known as the Deutschlandticket – is set to be extended beyond 2025, while self-employed women could receive maternity payments.
Further pledges include reviewing the partial legalization of cannabis, measures to encourage digital payments and a commission to investigate Germany’s response to the coronavirus pandemic.
GNA
PDC