The centrist parties of Germany reached a significant milestone on Wednesday by finalizing a coalition agreement, setting the stage for the Christian Democratic Union (CDU), the Christian Social Union (CSU), and the Social Democratic Party (SPD) to establish a new government.
Before the new government can take office, the coalition agreement must receive approval from party members.
“This coalition agreement marks a shift and serves as a strong statement for our nation,” CDU leader Friedrich Merz stated during a press conference, according to a translation by Finance Newso. Merz is expected to become Germany’s next chancellor.
“The forthcoming coalition aims to implement reforms and investments to ensure stability, enhance security, and bolster Germany’s economy. Germany will also stand as a reliable partner for Europe,” he emphasized.
The negotiations among the parties commenced shortly after the German election in February and experienced challenges in recent weeks. Although initial discussions showed promise with a significant fiscal reform proposal, contentious issues concerning taxes, the national budget, and migration policies surfaced.
Merz faced mounting pressure to avoid granting excessive concessions to the SPD. The CDU, alongside its sister party the CSU, emerged with the highest vote share in the recent election.
In contrast, the SPD, led by the outgoing Chancellor Olaf Scholz, finished third in the elections, trailing the far-right Alternative fuer Deutschland.
Negotiations Amid Geopolitical Tensions
The backdrop of the coalition negotiations was marked by distinct geopolitical dynamics, including U.S. tariffs under President Donald Trump and economic uncertainties for export-reliant Germany, as well as the implications of the White House’s involvement in the Russia-Ukraine conflict.
Lingering concerns have arisen regarding the continuity of U.S. support for Ukraine, along with the Trump administration’s pressure on NATO countries to increase their defense spending.
“Recent decisions made by the U.S. government have sparked new uncertainties. We can observe the immediate effects, so to speak,” Merz remarked on Wednesday. “We are uncertain about the future direction of the international landscape. However, that is why our message today is even more resolute — we intend to, and we will, actively contribute to shaping the evolving global context for Germany.”
Germany has been maneuvering through these challenging times under a de facto caretaker government.
Merz and his negotiating partners aimed to finalize the coalition agreement before the Easter holidays, which fall later this month.
— Finance Newso’s Lily Meckel contributed reporting to this story.
