Merz courts Bundestag support for sweeping reforms

Merz painted Germany's situation in dark colors. The economy was continuing to weaken, industrial jobs were being lost daily, and companies were dropping out because of high costs and red tape. He pointed out that, in his words, the statutory pension system was running deep deficits and that the pension fund would require roughly 120 billion euros from the public coffers in 2026 – almost a quarter of the federal budget of 524 billion euros in total.

Reform course and economic situation

The Chancellor outlined two paths: either Germany shied away from change, including changes that initially meant constraints; or the country used its strengths and potential to turn things around for everyone. „Entweder wir scheuen Veränderungen, und zwar Veränderungen, die zunächst auch Einschränkungen bedeuten, oder wir nutzen die Stärken und Potenziale, die wir haben, um das Ruder für alle herumzureißen“, said Merz. He called on politicians and citizens alike, saying each should examine „was er zum Gelingen des Ganzen beitragen kann“.

The previous evening, the black-red coalition of CDU/CSU and SPD had consulted with senior representatives of trade unions and employer associations in the Chancellery about the planned reforms. The meeting, which lasted more than three hours, was attended by, among others, the unions Verdi, IG Metall, and IG BCE, as well as the umbrella organization DGB. Although no concrete decisions were made, the participants agreed to continue the talks.

Top-level meeting at the Chancellery

Merz expressly praised the atmosphere of the meeting. „Dieses lange Gespräch hat in ausgesprochen guter, sehr konstruktiver Atmosphäre stattgefunden, und wir werden es zu einzelnen Themen auch weiter fortsetzen“, he said. CDU lawmaker Dennis Radtke, chair of the Christian Democratic Workers' Circle (CDA), also assessed the talks as a success. Radtke said in an interview with SWR Aktuell: „Viel wichtiger sei es, dass überhaupt gesprochen wurde. Aktuell brauche es keine Zwischenergebnisse. Es lägen Vorschläge auf dem Tisch und man befinde sich mitten im Prozess."

The coalition aims to put together a reform package covering pensions, long-term care, taxes, and bureaucracy reduction by the summer recess in mid-July. A government commission is to present its pension reform proposals on July 1. A coordination meeting with the federal states in the framework of the Minister-President Conference is also planned for June 25. Sören Pellmann, parliamentary group leader of The Left, sharply criticized the course, speaking of a „sozialen Kahlschlag“.

Business and experts

Calls for swift action also came from the business community. Employers' president Rainer Dulger said: „Klar ist: Reden ist Silber – Handeln ist Gold. Es braucht einen Reformwurf noch vor der Sommerpause." The „Wirtschaftsweise" Veronika Grimm likewise called on the federal government to take measures to boost growth. She advocated a higher statutory retirement age as well as cuts to the „Rente mit 63" and the mothers' pension. She described Germany's job protection law as „deutlich zu restriktiv".

Grimm also warned against reforms that „die zwar gut klingen, aber am Ende nichts bringen". As an example, she cited the integration of civil servants into the pension insurance system: additional contributions would indeed be generated, but so would additional entitlements that would have to be paid for. Added to that was considerable administrative burden in the ministries. She called for „wirksame" reforms as well as a reduction in levies and taxes.

SPD parliamentary group leader Matthias Miersch acknowledged the great challenges and appealed for understanding of the reform course. „Deutschland war immer stark, wenn man die Köpfe zusammensteckt", he said. Merz, too, stressed that the social partners had to be at the table when decisions were taken if the reforms were to find acceptance among the population. In this context, Radtke demanded that civil servants and the super-rich also had to contribute their share. If at the end of the process there were only an austerity program that primarily hit those with statutory insurance, „dann wird es nicht funktionieren", he warned.

Foreign policy and Ukraine

In the foreign policy portion of his government statement, Merz reaffirmed Germany's support for Ukraine. „Unser Ziel für die Ukraine bleibt ein gerechter und dauerhafter Frieden, der auch unsere Sicherheitsinteressen berücksichtigt", he said. Ukraine had been defending Germany's freedom for more than four years. He announced that the EU would step up pressure on Russia, act more robustly against the Russian shadow fleet, and begin work on a 21st sanctions package. A lasting peace could only be achieved in negotiations involving Ukraine, Russia, the United States, and Europe.

Merz also outlined a positive vision for Europe in a world in transition. „Wir arbeiten heute mit und für eine neue Weltordnung, in der Europa seinen starken Platz findet", he said. Europe should remain a power for freedom, prosperity, peace, and democracy. Union parliamentary group leader Jens Spahn underscored that the federal government stood firmly on the side of Ukraine, attacked by Russia, and also on the side of Israel in the Iran war, regardless of international criticism.

Criticism from the opposition

Sharp criticism came meanwhile from the opposition. Greens parliamentary group leader Britta Haßelmann said in the plenary: „Die Leute fühlen sich verarscht." She accused Merz of having made the word reform synonymous with cuts under his government. The planned reductions always hit the same groups: contributors to social insurance, those in need of long-term care and their relatives – and again and again, women in particular. She also called on the government, looking directly at the Chancellor: „Reißen Sie sich zusammen! Liefern Sie! Begegnen Sie den Menschen mit Respekt."

AfD parliamentary group leader Alice Weidel fiercely attacked the government statement, calling it „den Abgesang eines Gescheiterten". She accused Merz of a „Verachtung der Deutschen" and held him responsible for deindustrialization and a „Pleitewelle". She also called on the Chancellor to leave the coalition with the SPD and to seek „neue, konstruktive Mehrheiten" – implicitly hinting at cooperation with the AfD. Merz rejected this and had previously accused the AfD of laughing at the fate of millions of people in this country and traveling „nach Moskau zu ihren Champagnerempfängen". He categorically ruled out cooperation with the AfD.

The foreign policy debate is also set against the backdrop of the change of power in Hungary: following the election victory of an opposition alliance and the ousting of long-standing Prime Minister Viktor Orbán, an EU loan of 90 billion euros for Ukraine that Budapest had long blocked was released. Merz is currently working together with France and the United Kingdom to restart the stalled efforts to end Russia's war of aggression. He also came out in favor of a fundamental modernization of the EU budget in order to consolidate Europe as an independent force in a changing world.

Outlook and timeline

Observers assess the speech as the Chancellor's attempt to spark a broad societal debate about the upcoming reforms. Critics had previously complained that Merz had to make the seriousness of the situation clear in his government statement and win over as many people in the country as possible. With reference to the meeting with unions and employers the previous evening, the Chancellor stressed that he and his government had chosen the second path and were firmly determined to continue pursuing it: „Wir wollen in dieser Wahlperiode das Fundament unseres Landes so erneuern, dass es wieder für viele Jahre, vielleicht sogar für ein Jahrzehnt trägt."

A dense schedule is taking shape for the coming weeks: the pension commission is to present its results on July 1, the Minister-President Conference is planned for June 25, and the coalition wants to put forward a concrete reform package by the summer recess in mid-July. The economic situation and the pressure of the social partners to act swiftly make the schedule look ambitious – especially as parts of the opposition have already announced sharp criticism with a view to social cuts and a retirement age of 70.