Merz defends reform course in Bundestag declaration as opposition warns of imbalance

Two paths, one reform package

Merz dedicated the larger part of his speech to domestic policy before turning to foreign policy. He stressed that reform was urgent, saying industrial jobs were being lost every day and companies were giving up in the face of high costs and bureaucratic burdens. The coalition aims to put together a reform package by the summer break in mid-July covering the labour market, social insurance, income tax and bureaucracy reduction.

Government spokesman Stefan Kornelius confirmed that further talks had been agreed upon after the reform kickoff. "Dazu wurden weitere Gespräche vereinbart," Kornelius said. Merz also praised the previous evening's meeting of coalition leaders with employers and trade unions at the Chancellery, describing it as having taken place in a very good, constructive atmosphere and saying discussions on individual topics would continue.

Kickoff with the social partners

The Wednesday meeting at the Chancellery brought together coalition leaders with representatives of trade unions and business associations to discuss the upcoming reform projects. The meeting produced no concrete results, as expected, but the participants nevertheless assessed it as a success and expressed optimism. Dennis Radtke, chairman of the Christlich-Demokratische Arbeitnehmerschaft (CDA) and a CDU member, said in remarks to SWR Aktuell moderator Christian Rönspies that what mattered more was that the talks had taken place at all. "Viel wichtiger sei es, dass überhaupt gesprochen wurde," Radtke said.

Radtke cautioned that the process would not work if the outcome were not genuine structural reforms but merely strong austerity programmes borne mainly by statutory insured persons. He also said that civil servants and the super-rich should contribute their share. "Auch Beamte und Superreiche sollten ihren Beitrag leisten," he added, and argued that the social partners must be included in decisions for the changes to gain public acceptance.

Economists push for 'powerful' reforms

Economist Veronika Grimm, a member of the German Council of Economic Experts (Wirtschaftsweise), went further. She called for "wirkmächtige" (powerful) reforms and urged the federal government to take measures to promote economic growth. In remarks to MDR AKTUELL, she argued that taxes and levies must be reduced and regulations cut, including in the area of termination protection (Kündigungsschutz), which she described as "deutlich zu restriktiv." She also reiterated her call for a higher statutory retirement age and said the Mütterrente (mothers' pension) and the Rente mit 63 (retirement at 63) must be scaled back.

Grimm criticised reform debates that focused on ideas that "zwar gut klingen, aber am Ende nichts bringen" — that sound good but ultimately change nothing. She cited the debate on integrating civil servants (Beamte) into the statutory pension system as an example of an idea that would not deliver cost relief, arguing that additional contributions would be offset by additional claims that would have to be paid out, and that integration would also create significant administrative effort for ministries.

On pensions, Merz said upcoming decisions must set incentives for working longer, and that the government must reform social security so that it remains sustainable, even if this drew criticism. He said the need for change applied to Germany's defence capability, to major reform tasks, and to strengthening domestic economic competitiveness. "Dann (...) ist der Deutsche Bundestag, sind wir als Abgeordnete hier am Zug," he added.

Foreign policy: support for Ukraine

Turning to foreign policy, Merz assured Ukraine of further German support and called for renewed efforts to end the war. He said Ukraine had been defending freedom, including in Germany, for more than four years and that a lasting peace could only be achieved in negotiations involving Ukraine, Russia, the USA and Europe. "Ein tragfähiger Frieden wird nur in Verhandlungen mit Beteiligung der Ukraine, mit Russland, der USA und Europa erreicht werden können, anders wird es nicht möglich sein," he said. He added that Ukraine belongs to Europe and, in a longer perspective, to the European Union.

On NATO, Merz said Germany was strengthening the alliance's eastern flank in response to Russia's apparent willingness to escalate, while also supporting efforts for a negotiated solution. He is currently attempting, together with France and the United Kingdom, to revive the stalled efforts to end the Ukraine war. Should new negotiations between Ukraine and Russia take place, the Europeans want a seat at the table, though the configuration remains unclear.

With regard to upcoming financial negotiations, Merz reiterated his call for a fundamental modernisation of the EU budget to consolidate Europe as an independent power in a changing world. He clearly rejected new debt at the EU level. The original main topic of the declaration was the upcoming EU summit in Brussels the following week, which was to address Ukraine, China and budget planning.

Sharp exchanges with the AfD

In a sharp passage, Merz accused the AfD of mocking the fate of millions of people in Ukraine and travelling to Moscow for champagne receptions. "Sie lachen darüber, über das Schicksal von Millionen Menschen in diesem Land, und reisen nach Moskau zu ihren Champagnerempfängen, gute Reise weiterhin," he said. AfD parliamentary group leader Alice Weidel responded by calling the government declaration "der Abgesang eines Gescheiterten" — the swan song of a failed man — and accusing Merz of contempt for Germans and of responsibility for deindustrialisation and an "Insolvenz-Tsunami." She said the government plans rising social contributions alongside benefit cuts to finance the consequences of "verfehlte Massenimmigration."

Greens parliamentary group leader Britta Haßelmann accused the chancellor of affronting people every day and said people felt cheated, as cuts planned by Union and SPD always affected the same groups: contributors to social insurance, those in need of care and their relatives, and above all women. "Die Leute fühlen sich verarscht," she said. She criticised that under Merz the word "Reformen" had become a synonym for cuts.

Opposition warns of imbalance

SPD parliamentary group leader Matthias Miersch acknowledged that Germany faces major challenges and needs to change in many areas, and said it was important that reform outcomes be perceived by everyone as fair. "Deutschland war immer stark, wenn man die Köpfe zusammensteckt," Miersch said. Union parliamentary group leader Jens Spahn emphasised that the German government stands firmly with Ukraine, which was attacked by Russia, and also stands with Israel in the Iran war, regardless of international criticism of this course.

Left party parliamentary group leader Sören Pellmann spoke of a policy of "social devastation" and said billions were allegedly being sunk into arms corporations while many benefits in health insurance, long-term care and pensions were claimed to be unaffordable. He demanded that more money be invested in education, infrastructure, social cohesion and the future. The debate took place in the German Bundestag on the occasion of the EU summit in Brussels the following week.

The exchange underscored the political tensions surrounding the coalition's reform push, even as the meeting with the social partners was characterised on all sides as constructive. The chancellor, the coalition's parliamentary leaders and the social partners all indicated that further talks would continue, with the formal reform package expected to take shape in the coming weeks and months. "In den kommenden Wochen und Monaten werde die schwarz-rote Koalition Vorschläge für die großen Reformaufgaben vorlegen," Merz said.