Friedrich Merz promised to do things differently. Ahead of the country’s federal election last month, the likely next chancellor of Germany said he had a ‘clear plan for Germany’s economic future’. From day one in office, he wanted to be seen to enact the change so many Germans had voted for. But, held to ransom by the election’s losers, his centre-right Union is already being forced into so many compromises that Merz may turn out to be just as ineffective and unpopular as his predecessor, Olaf Scholz.
Merz wasn’t off to a bad start. Okay, most Germans tell pollsters that they are sceptical that he’ll be a good chancellor, but they are open to persuasion. Surveys indicate that the wishes of the majority appear to be aligned with his: less illegal immigration, stricter rules on unemployment welfare benefits and less bureaucracy. After all, Merz’s Union won the election, gaining 28.5 per cent of the vote share – less than he’d hoped but more than the centre-left Social Democrats (SPD) and Greens combined.
It’s now or never for this budget
Many Germans also breathed a sigh of relief when the results indicated that a coalition between the Union and Scholz’s SPD was possible. Current polling indicates that the majority still think this is a good thing – the frustration over Scholz’s dysfunctional three-way coalition is raw.
But having ruled out working with the anti-immigration far right AfD, which came second with over a fifth of the vote, Merz is now entirely at the mercy of the SPD despite it getting its worst result since the 19th century. Scholz’s party promptly used this long lever during the coalition negotiations to bounce the Union into agreeing to a spending package which amounts to nearly €1 trillion (£842 billion) of borrowed money for defence and infrastructure.
This is a stunning reversal of Merz’s pre-election promise not to make new debt but to pay for reforms through cuts and economic growth. However, most Germans concede that their depleted armed forces need a massive boost – particularly in light of US President Donald Trump’s withdrawal of American security guarantees from Europe. As a recent poll shows, an even bigger majority of 78 per cent wants more spending on infrastructure. This is hardly surprising in light of the country’s collapsing bridges and dilapidated roads. Germany’s trains are now even less punctual than Britain’s.
Bold reforms are what most Germans want, so breaking an election promise to spend big on fixing things that are evidently broken isn’t the end of the world. What Merz can’t get away with, however, is appearing as a continuity candidate in the style and substance of the previous government. That, however, is exactly what is happening now.
This coming Tuesday, the German parliament will decide the fate of the proposed spending package, but the votes of the Union and SPD won’t be enough. Germany wrote a so-called ‘debt brake’ into its constitution under Angela Merkel, so this kind of borrowing now requires a two-thirds majority to vote it through in parliament. Having ranted against ‘Green and leftist nutjobs’ before the election, Merz now needs the Green party, which, excluded from the next government, hasn’t got much of an incentive not to torpedo his leadership credentials.
In fairness to the Greens, Merz initially didn’t seem to have made much of an effort to woo them: he reportedly left them a voicemail message asking for their vote. Then, his side offered to earmark €50 billion (£42 billion) of the budget for climate protection, but the Greens stuck to their loud nein! To get their agreement, he had to increase the offer to €100 billion for Green policies alongside other concessions.
All of this will sound tediously familiar to German voters. For three years, Scholz failed to steer the three parties of his coalition government in the same direction. What is even more frustrating now is that the parties that are holding Merz to ransom lost last month’s election spectacularly. There is a rightwing majority in parliament, but it remains untouchable because of the ‘firewall’ against the AfD, forcing Merz to perpetuate the arguments and style of the Scholz era.
Merz’s hands were tied. He clearly feels that his future government and his credibility as a leader hinge on the spending package, or he wouldn’t have agreed to what was very clearly an SPD idea to start with. To push it through at all costs, he had to give the Greens what they want; including restrictions on how this money can be used. The budget now looks like it is as committed to the goals of the old government as the new.
Voters may forgive Merz since he was acting under time pressure. In the newly elected parliament, which will first convene on 25 March, the AfD and the far-left party Die Linke will hold just over a third of the seats combined. They can, therefore, block a two-thirds majority even if the Greens are on board. Having vowed not to collaborate with the AfD in any shape or form, a conservative chancellor would then have to plead with deeply anti-military left-wingers for higher defence spending. In addition, the Union has agreed as a party never to work with Die Linke and would thus breach another one of its principles in exchange for power. So it’s now or never for the budget.
But going forward, Merz will have to find a way to steer a course that is noticeably different from his predecessor. Most Germans voted for change and if Merz turns out to be as happy to compromise on other key issues, particularly on immigration, they won’t feel that they are getting change but a perpetuation of Scholz’s deeply unpopular coalition by other means.
What Germany needs is a clear path out of its current malaise, not a continuation of politics of the lowest common denominator. With no prior government experience, Merz has certainly dived in at the deep end to prove that he’s got what it takes to pull Germany out of the mess it is in.
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