Germany’s Feeble Grand Coalition
Christian Democrat Friedrich Merz has been confirmed as Germany’s new chancellor. His grand coalition is off to a rocky start — and its call on Germans to swallow austerity is sure to make things worse.
Friedrich Merz, leader of the Christian Democratic Union (CDU), attends the coalition-contract signing between the CDU, the CDU’s Bavarian sister party, the Christian Social Union (CSU), and the German Social Democrats (SPD) on May 5, 2025, in Berlin, Germany. (Sean Gallup / Getty Images)
Friedrich Merz’s new coalition government was supposed to herald an era of unity and responsible governance. Built on a pact between Merz’s Christian Democrats (CDU) and the Social Democrats (SPD), it follows years of strife under the previous “traffic light” alliance of center-left and neoliberal parties, whose collapse late in 2024 prompted early elections. Yet in a historic first for Germany, the coalition’s initial attempt to elect the chancellor by a simple majority vote failed. Rather than a sure-footed new start, it seems that Germany is careening from one unstable government to the next. We can only speculate who exactly within these two parties voted against Merz in the confirmation vote, and we’ll likely never know if the defections that disrupted it were premeditated. Yet this debacle is more than likely rooted in internal party tensions, suggesting that neither of the main forces in government are fully united.
Neither can claim unwavering party backing, as is clear from their respective cabinet choices. Merz’s cabinet completely sidelined the more socially conscious “Christian-social” wing of his party. New SPD head Lars Klingbeil initially promised a complete turnaround, a “generational change” for the party after the failures under previous chancellor Olaf Scholz. No one from the left wing of the SPD is represented in government.
The once-powerful mainstream parties, the CDU and SPD, have lost considerable political influence. This “black-red” coalition government, once a powerful bloc, has been reduced to a shadow of its former self. Never before has a “grand coalition” been so small. The era of stability under Angela Merkel was backed by broad parliamentary support. Merz is reduced to acting in the absence of a clear majority.
Almost immediately after the February 23 federal election, Merz resorted to a democratically dubious power play. He forced his budget package through the previous Bundestag with brute force, as following the election the centrist parties would no longer have had the necessary two-thirds majority needed to carry out his plans with the new parliament. Merz’s dismal results in the parliamentary vote for chancellor are also a sign of the political center’s dwindling power base. Just how fragile this black-red coalition government is seems to be slowly dawning on those in power.
A Society Without Confidence
Merz appears to lack the trust of his own colleagues, and the majority of the populace is equally skeptical. According to the latest ZDF Politbarometer poll, only 38 percent of the population considers him a suitable chancellor. Merz’s former role as a financial lobbyist and his culture-war rhetoric have made him notoriously unpopular. But the discontent runs deeper — and reflects a growing erosion of trust in politics. If Germans voted again last Sunday, this grand coalition would not have a majority at all. Less than half of those surveyed believe that the CDU and SPD will contribute to solving Germany’s most pressing problems. It is a government without support, in a society without confidence.
According to recent surveys, people want progress above all in the key areas of the economy and social issues. It is here where politics can have a concrete impact and improve people’s lives. Migration and asylum in fact lag far behind in third place on the list of people’s top priorities. Yet the coalition agreement between the CDU and SPD suggests that the incoming government will fail precisely where it needs to deliver and will govern without addressing the priorities of most people.
Handouts for Business, Austerity for the People
The German media has repeatedly praised the SPD for managing to pull off some impressive negotiating wins despite its poor election results (just 16 percent in February). Yet the coalition agreement clearly bears the hallmarks of the conservatives. The SPD, despite suffering the worst election result in its modern history, managed to secure a total of seven ministries. But this is mainly good news for Social Democrats who would like to become ministers. The general population has very little to gain if no real social democratic policies are enacted from these offices. And such policies are almost nowhere to be found in the incoming government’s coalition agreement.
What we can instead expect from this document are tax breaks for corporations and the watering down of labor and environmental regulations through the dismantling of regulations such as the supply chain law. There is promised relief for middle- and low-income households but only with increased restrictions. It is unclear if the minimum wage will be raised to €15 per hour, after all; and the potential extension of the maximum weekly working hours has opened the door to an attack on the eight-hour day.
For those who already have the least, the new basic-income-support system includes sanctions that are so harsh that they will probably be ruled unconstitutional.
Emphasis is once again being given to “placement priority,” which means nothing other than forcing people to take any job, no matter how precarious it may be. It is plain to see that this government has a clear bias in favor of business interests. It takes a lot more imagination to see how this agreement is an example of major negotiating successes for the SPD.
The conservatives of the CDU pulled off the real coup before the coalition agreement was even negotiated, by deliberately ensuring that the so-called debt brake (a constitutional limit on government borrowing) was lifted exclusively for the purposes of military spending. Since its implementation in 2009, the debt brake had been the central argument against social investment: there was no money left for social programs because all possible programs had to be financed from the limited budget. Now that it has been selectively relaxed for military purposes, the tables have been turned: precisely because debt is being ignored for armament, even more savings must be made in the social sector. The point remains the same — there is never any money for social welfare.
Austerity is over for the arms industry, but it is being ramped up for everything and everyone else. Thorsten Frei, one of the chief negotiators for the CDU and now head of the Chancellery, has already announced tough cuts to the social welfare system: “Health care, nursing care, and pensions are the big challenges. Unpleasant decisions will have to be made.”
The deal pushed through by the Christian Democrats is just a continuation of the essence of the debt brake by other means — keeping the question of how wealth is distributed out of politics. Any investment that did not serve the interests of capital could be blocked by invoking the debt brake: anything from education and social housing to the expansion of social security systems to the decarbonization of industry and climate protection could simply be declared unaffordable.
Merz has cemented this austerian logic and secured military spending to boot. It is here that the real success of the negotiations lies — while the SPD has needlessly squandered a historic opportunity to reform the debt brake. The €500 billion investment package for infrastructure that accompanies this deal is better than nothing. Yet if investment needs rise in the coming years, any further money will have to be forcefully wrested from the CDU.
Nor should we place too much hope in this financial package to give the economy a significant boost. Recent financial forecasts by the German Institute for Economic Research (DIW) predict another year of stagnation in 2025 and rather meager growth of 1.1 percent in 2026.
Stimulus for the Far Right
The new government is not only expected to deliver economic renewal but also to put a stop to the Alternative für Deutschland (AfD). The CDU and SPD are styling themselves as a bulwark against this far-right party. Merz in particular has long been regarded as a kind of secret weapon against the AfD. Yet his party’s extremely shortsighted and calculated attempts to stoke the flames on the Right — in the hope of absorbing the AfD’s potential base and thus weakening that party — have backfired. Instead of disciplining the AfD, Merz and his ilk have only popularized its demands further. Now they can no longer banish the ghosts they have conjured up. They are themselves being driven by the outrage they previously sparked.
Nowhere is this dynamic clearer than in their announced tightening of migration policy, a massive shift: naturalization is to be made more difficult, and even refugees from Ukraine are to have their citizens’ income cut. Deportations — even to Syria and Afghanistan — will increase. There will be pushbacks directly at the borders, and family reunification will be suspended for two years. Criminals without a German passport will be deported more quickly, and border controls will remain in place. These plans are in line with what the AfD has been advocating for years. Whether intentional or not, this policy is a response to calls for cooperation with the AfD, as the positions of the two parties are becoming increasingly aligned.
Following Merz’s election defeat, the AfD’s parliamentary secretary Bernd Baumann addressed the Christian Democrats directly. He said that it was his hope the dissenters who refused to support Merz were “wise voices” who simply wanted the CDU to return to a “reasonable course” — and pointedly reminded the CDU that, together with the AfD (which won second place in the February election, ahead of the SPD), it would have a more stable majority and could deliver on all its election promises. The far right is still holding out an olive branch to the CDU. Merz has only himself to blame for Baumann’s ability to put pressure on the CDU from the right, because he is allowing the AfD to exert massive influence on politics without even having any part in the government.
The policies planned by this black-red coalition will do nothing to alleviate the simmering conflicts over the distribution of wealth, fueled by economic stagnation, declines in real wages, and gloomy prospects for the future. They will instead intensify these conflicts. While massive investments are planned, they are not aimed at strengthening the economic position of the broader population. On the contrary, Merz has already declared that the days of “paradise” are over.
Calling austerity “savings policy” is an understatement given the overall political situation. These policies are not just about saving money but are a tool for political discipline. By making resources increasingly scarce, the government is forcing the vast majority of people to focus all their energy on making ends meet and preventing their own downward social mobility. More active political participation and the raising of radical political demands, however, often arise when living conditions improve. It is only once people have experienced that progress is possible that they gain confidence and are no longer so easily placated.
This is precisely what austerity is intended to prevent: it not only limits people’s scope for action but also narrows their political imagination and expectations. Opposition that never arises in the first place does not need to be combated — this is the silent advantage of austerity. While support for the political mainstream craters, this is the strategy it has chosen in the hope that it will help them cling to power. The only force represented in the Bundestag that is calling for economic and social policies that are fundamentally different from those of the ruling parties is Die Linke. Over the next four years, it will be crucial for the party to exploit this potential as the only real opposition — more vocally and more resolutely than it has done so far.