Friedrich Merz vows reforms and investments for Germany's future

Germany has recently established a new coalition government led by conservative leader Friedrich Merz, who is aligned with the center-right Christian Democratic Union and its sister party, the Christian Social Union. This coalition includes the center-left Social Democratic Party, which finished third in the February elections. On May 5, 2025, the centrist parties signed a significant coalition agreement consisting of over 140 pages titled ‘Responsibility for Germany’. This agreement outlines ambitious plans aimed at economic growth, migration policy reforms, and tax law changes. In the new government, key appointments were made, including Lars Klingbeil as finance minister and vice-chancellor, Katherina Reiche as economy minister, Johann Wadephul as foreign minister, and Boris Pistorius remaining as defense minister. The coalition acknowledges the need for cooperation between Merz and Klingbeil in order to ensure the government’s success and to prevent the rise of far-right parties such as the Alternative for Germany (AfD) in the upcoming elections. The backdrop of this coalition is the recent collapse of the previous government led by Olaf Scholz, a member of the Social Democratic Party. This collapse resulted from disagreements over budgetary and fiscal policies, which in turn led to the sacking of former finance minister Christian Lindner by Scholz. The Reconstruction of the coalition is seen as vital, given that Germany's political landscape has been beleaguered by far-right sentiments affecting its social cohesion and credibility. As lawmakers prepared to vote on May 6, 2025, to officially confirm Merz, anticipation grew concerning his ability to address pressing issues such as the ongoing war in Ukraine and the state of Germany’s economy. His leadership would be marked by the necessity to maintain stability within the coalition while navigating challenges presented by the AfD's rise, especially given the intelligence service's recent classification of the AfD as a right-wing extremist organization. The new coalition aims to push forward reforms that will enhance Germany's domestic policies and restore confidence in its political foundations, which have been shaken amidst the tumult of recent years.