Friedrich Merz has promised to put Germany “back on track” with his newly agreed programme for government. The coalition deal announced on Wednesday between Merz’s centre-right Christian Democratic Union (CDU) and the much-diminished Social Democrats (SPD), who have yet to formally approve it, should pave the way by the end of May for a badly needed new government.
About time too. Reeling from both Donald Trump’s apparent disengagement from the defence of Europe and his sweeping tariffs - some now temporarily suspended – the sluggish German economy urgently needs strong medicine. And the EU needs a strong Germany.
Ahead of coalition talks, Merz had already moved fast to begin to meet those challenge, surprising if not startling European allies by heretically relaxing the country’s debt rules and committing Germany to a ¤1 trillion spending programme on weapons and infrastructure, a seismic shift in fiscal policy for both the CDU and the country.
With the Trump tariffs still threatening to tip the German economy into recession and erase any gains from the spending package over the next decade, the programme for government, small beer by comparison, provides a hardly radical but likely stable platform for the new coalition.
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There’s a bit in it for each of the parties, their ideological differences papered over. It promises to lower energy prices to boost competitiveness, increase the minimum wage, reform what the CDU sees as overgenerous welfare, introduce incentives to lift EV sales , and make tax cuts for corporations. It also promises to cut the size of the federal government by 8 per cent over four years.
European allies will be more worried about the migration stance, an ominous nod by both parties to the electoral threat of the nationalist far-right. They promise to maintain border checks until a lasting form of “functional external border control” is found by Brussels, including speeding up deportations to “safe countries”. Angela Merkel’s open borders policy is now firmly buried.
