BERLIN – Friedrich Merz, the head of Germany’s conservative CDU/CSU bloc and likely future chancellor, emphasized the need for significant cost-cutting across all levels of government despite his backing of a €500 billion financial package. Merz stated that the country must engage in tough discussions about budget reductions during coalition negotiations with the center-left Social Democrats (SPD).
“The need for cost reductions will be present at the federal, state, and local levels,” Merz told German public broadcaster ARD. “The fiscal space has not expanded.”
Merz’s support for the controversial financial package, which includes relaxing Germany’s constitutional borrowing limits, has drawn criticism from fiscal conservatives. The package includes investments in defense and infrastructure and is designed to address pressing challenges, but it has sparked significant debate over its impact on Germany’s long-term fiscal health.
The package has received the backing of the SPD, and after last month’s snap election, the two parties are in talks to form a coalition government. The plan, which requires approval from both the Bundestag and Bundesrat, has already cleared the Bundestag’s Budget Committee.
Environmentalists, initially opposed, are now expected to support the proposal after €100 billion was earmarked for climate change initiatives. Merz hopes the constitutional amendments associated with the package will be approved before the new Bundestag convenes on March 25.
Despite gaining support, the package faces legal challenges. Several Bundestag members, including independent Joana Cotar, have filed complaints with Germany’s Federal Constitutional Court in Karlsruhe, requesting that the vote be delayed. Cotar, who has filed a second lawsuit on the matter, contends that the decision requires more public debate. Members of the Free Democratic Party (FDP), including financial expert Florian Toncar, argue that the package has not been sufficiently discussed and its societal implications remain unclear.
Toncar criticized the current SPD-Green government for failing to address key concerns, adding that the parliamentary debate risked becoming a mere formality.
As coalition talks continue, Merz acknowledged that discussions with the SPD would be challenging. “Difficult conversations are ahead,” he said, highlighting the need for reforms and potential savings in the federal budget. He also stated that while coalition negotiations are ongoing, it is still too early to set a date for the formation of the new government. Merz, however, expressed hope that he could assume the role of chancellor before Easter in mid-April, about 50 days after the election.
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