Germany’s conservatives under Friedrich Merz have reached a deal with the Social Democrats to govern Europe’s biggest economy, five months after the previous government collapsed.
Merz, 69, said their agreement sent “a strong and clear signal” to Germans and the EU that they would get “a strong government capable of action”.
Germany was already in recession before it was buffeted by economic turbulence, caused by US President Donald Trump’s trade tariffs.
“The key message to Donald Trump is Germany is back on track,” said the chancellor-in-waiting, promising to fulfil defence commitments and revive economic competitiveness.
Merz and his coalition partners have been under intense pressure to put an end to Germany’s political limbo since his Christian Democrats won federal elections in February.
He has also just seen his party overtaken in an opinion poll by the far-right, anti-immigration Alternative for Germany (AfD).
Announcing the government deal, Merz promised to reform and stabilise Germany, with a focus on migration, the economy and defence.
“Europe can rely on Germany,” he said, promising “a strong plan to bring our country to the forefront again”.
He will have to wait for the week starting 5 May for the new parliament to elect him as chancellor, but should have no problem with a 13-seat majority.
Who is likely to take Germany’s key Cabinet posts?
Chancellor-in-waiting Friedrich Merz, whose conservative CDU/CSU emerged as the biggest party in Germany’s February elections, has not yet finalized the new cabinet.
However, here are some of the key politicians in the running for the most crucial portfolios. The top briefs are all tipped to go to men, as well as the increasingly important portfolio of defense minister.
Vice Chancellor and Finance Minister: Social Democrat co-leader Lars Klingbeil is widely expected to take the powerful posts of finance minister and vice-chancellor.
Holding such key positions could give him a good chance at a run for the chancellery himself, at some point down the line.
Relatively young at 47, he has become the dominant voice in the SPD since the election, taking the baton from outgoing Chancellor Olaf Scholz.
Foreign Minister: Some expect the job of Germany’s top diplomat to go to Johann Wadephul, the 62-year-old deputy chair of the CDU/CSU parliamentary group. He is known for pushing to allow Ukraine to strike targets inside Russia with Western-supplied weapons.
A strong contender to run the foreign ministry has also been Armin Laschet, 64, a former CDU party leader who was his party’s chancellor candidate in the 2021 general election.
Interior Minister: The brief is to be held by the Bavarian Christian Social Union (CSU) and the foremost politician from the Bavarian conservative in Berlin is state group leader Alexander Dobrindt. Expectations are correspondingly high, even within his own party, that he will move into the cabinet as interior minister — the key ministry that the CSU will hold — although it’s not clear whether he actually wants the job.
Defense Minister: The incumbent in the post, the SPD’s Boris Pistorius, is expected to stay in the job, having won plaudits as defense minister both from other politicians and the German public. The 65-year-old has often been voted Germany’s most popular politician in opinion polls, at a time of growing unease about the threat posed by a hostile Russia. Pistorius could also become Friedrich Merz’s deputy, should Klingbeil decide against it.
What women might take ministerial posts?
The Social Democrats’ Svenja Schulze could remain in post as Minister for Development and Klara Geywitz as Minister for Construction.
Sonja Eichwede, a member of the Bundestag from Brandenburg, is being discussed for the justice ministry. However, the current interior minister, Nancy Faeser, has also recently been considered for the position.
It is unclear whether the much-criticized SPD co-leader Saskia Esken will still claim a cabinet position. She has not yet commented on this.
Current Bundestag President Bärbel Bas could possibly expect a new position. She is being considered for party leader and parliamentary group leader, but also for a cabinet position and could replace party colleague Hubertus Heil as labor minister.
From the CDU, Schleswig-Holstein’s education minister Karin Prien could become education minister at the national level.
What’s in the coalition agreement?
In their 144-page coalition contract, Germany’s two big centrist parties have vowed the following:
- Trade: Reaching a medium-term free trade deal with the United States. In the shorter term, the coalition parties aim to avoid trade conflicts with the US and focus on reducing import tariffs each way. Swift as possible EU agreements with Latin America’s Mercosur bloc and Mexico.
- Energy and climate: Electricity prices to be lowered by at least 5 cents through a reduction in electricity tax and grid fees. An increase in gas power plant capacity. A legislative package to allow carbon capture and storage. The abolition of a controversial heating law to phase out fossil fuel heating. A binding EU climate target to cut net emissions 90% by 2040.
- Borrowing and taxation: An expert commission on modernizing Germany’s debt brake, which restricts public borrowing. A corporate tax rate reduction from 2028. Significant lowering of sales tax on restaurant food.
- Labor: Tax-free overtime pay tax-free and tax benefits for those working beyond retirement age. A reform of unemployment benefits and stricter sanctions for those refusing to work. A minimum wage target of 15 euros per hour from 2026.
- Defense: Ramping up defense spending “significantly” to meet NATO targets for troops and weapons. A new form of military service, for now voluntary. Readiness of forces to be stepped up. Continued support of Ukraine. A law to speed up defense procurement and simplify procedures. Standardization of military equipment in cooperation with European partners.
- Migration: Suspension of family reunification for people with a so-called subsidiary protection status. An end to all federal admissions programs for refugees. Asylum seekers will be rejected at land borders. Germany to start deporting people to Syria and Afghanistan, starting with criminals and potentially dangerous persons.
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