Feb 26

Feb 26 Challenges Facing Friedrich Merz in Forming a Coalition Government

Introduction

The 2025 German federal election has positioned Friedrich Merz’s CDU/CSU alliance as the largest parliamentary bloc, yet securing a functional coalition requires navigating a fractured political landscape.

With the SPD as the only viable partner and the far-right Alternative for Germany (AfD) excluded from negotiations, Merz confronts a labyrinth of policy disputes, constitutional constraints, and internal party resistance.

The article reviews the multifaceted obstacles complicating coalition formation.

Policy Divergences with the SPD

Fiscal Policy and the Debt Brake

A central conflict arises over Germany’s constitutional debt brake, which limits new borrowing to 0.35% of GDP.

The SPD advocates reforming this rule to enable public investments in infrastructure and climate initiatives, while Merz’s CDU/CSU insists on fiscal discipline and private-sector incentives.

The previous government’s collapse over a €25 billion budget shortfall underscores the volatility of this issue.

Amending the debt brake requires a two-thirds parliamentary majority (416 seats), necessitating support from the Greens and Left Party—both of whom oppose Merz’s austerity leanings.

Defense Spending and Social Priorities

Merz aims to elevate defense spending to 3% of GDP, including reinstating mandatory military service, whereas the SPD demands balanced allocations for social programs.

The SPD’s secretary general, Matthias Miersch, criticized Merz’s “mini-Trump” rhetoric, reflecting deep ideological rifts.

Reconciling these priorities is critical, as the SPD’s base resists cuts to welfare amid inflation and energy crises.

Migration and Labor Policies

Merz’s proposed immigration restrictions—halting family reunification and reducing asylum benefits—clash with the SPD’s humanitarian stance.

Additionally, the SPD opposes Merz’s middle-class tax cuts, arguing they favor higher earners.

These disagreements mirror the CDU’s failed attempt to pass strict migration laws with AfD support, which the SPD denounced as eroding democratic norms.

Internal Party Dynamics and Leadership Struggles

SPD’s Existential Crisis and Leadership Transition

The SPD’s historic defeat (16.4%) has triggered a leadership vacuum, with Olaf Scholz stepping down and Defense Minister Boris Pistorius emerging as a potential successor.

Internal party votes on coalition participation could delay negotiations, as SPD members remain skeptical of another grand coalition after their electoral collapse.

Secretary General Lars Klingbeil emphasized there is “no automatism” forcing the SPD into a coalition, demanding Merz demonstrate “clear boundaries against the AfD”.

CDU/CSU Factional Pressures

Merz faces pressure from his conservative base to resist concessions to the SPD, particularly on fiscal policy.

Markus Söder, leader of the Bavarian CSU, has ruled out collaboration with the Greens, narrowing Merz’s options.

Meanwhile, Merz’s alignment with Trumpian rhetoric—labeling opponents “left and green nutters”—has alienated potential partners, complicating trust-building efforts.

Constitutional and Parliamentary Hurdles

Supermajority Requirements for Structural Reforms

Amending the debt brake or advancing major legislation requires cross-party support beyond the CDU/CSU-SPD coalition’s 328 seats.

The AfD (20.8%) and Left Party (9%) collectively hold 216 seats, enabling them to block constitutional changes.

This gridlock risks perpetuating austerity and stifling Merz’s defense ambitions unless he negotiates with ideologically opposed parties—a politically untenable scenario.

AfD’s Influence and Coalition Stability

The AfD’s record performance amplifies pressure on Merz to demonstrate stability. However, any perception of collaboration with the far right—such as Merz’s controversial migration bill—could fracture the SPD alliance.

The SPD has conditioned coalition talks on explicit CDU/CSU assurances to isolate the AfD, fearing Merz’s rhetoric legitimizes far-right agendas.

Public and Intra-Party Opposition

SPD Grassroots Resistance

SPD members, disillusioned by Scholz’s leadership, may reject a coalition perceived as capitulating to CDU demands.

The party’s left wing opposes Merz’s austerity measures and migration policies, viewing them as antithetical to social democracy.

An internal SPD vote on any coalition agreement could prolong negotiations, particularly if Pistorius’s leadership bid sparks factional disputes.

Electoral Pressures and Far-Right Gains

High voter turnout (83%) reflects public demand for decisive governance, yet Merz’s concessions to the SPD risk alienating CDU conservatives.

Conversely, austerity measures could fuel further AfD gains, particularly in economically struggling regions.

Merz must balance appeasing his base with addressing systemic issues like Germany’s recession and industrial decline.

Tight Timelines and External Crises

Negotiation Deadlines and Economic Urgency

Merz aims to form a government by Easter (April 20), but SPD internal processes—including leadership contests and membership consultations—could delay ratification.

Meanwhile, Germany’s economic stagnation demands immediate action, with major firms like Volkswagen announcing job cuts and industrial output contracting for two consecutive quarters.

Geopolitical Pressures

The U.S. withdrawal from European defense initiatives under Trump necessitates rapid EU military integration—a Merz priority that conflicts with the SPD’s focus on social spending.

Sustaining Ukraine aid amidst budget deficits further strains fiscal unity, as the SPD resists diverting funds from domestic programs.

Conclusion

A Precarious Balancing Act

Merz’s path to a CDU/CSU-SPD coalition hinges on reconciling irreconcilable fiscal philosophies, pacifying internal dissent, and leveraging external crises to forge compromises.

While a grand coalition offers short-term stability, its success depends on Merz tempering his pro-austerity base and the SPD selling concessions to its disillusioned electorate.

Failure risks empowering the AfD, prolonging political paralysis, and undermining Germany’s capacity to address economic and geopolitical crises.

As Merz himself acknowledged, “The world is not waiting for us”—a stark reminder of the stakes at play.

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