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Friedrich Merz, German Chancellor, takes place of the chancellor, after the oath, in the Bundestag in Berlin, Germany, Tuesday, May 6, 2025.
Crystan sorry Bloomberg | Gets the image
After some dramaturgy and approximately 10 weeks after the German elections, the largest economy finally has a leader: Friedrich Merz.
But his lifting was not easy. On Tuesday Merz failure To be chosen by the chancellor in the first round, an unprecedented event in the contemporary history of the country. Despite providing the necessary parliamentary support in The second attempt Later, on this day, the Mertz seems to be starting a new role of a few wounded.
“This is the weakest start,” said CNBC Carsten Brzeski, Global Macro in Ing.
Other observers, such as Cyrus de la Rubia, the chief economist of the Hamburg commercial bank, look less concerned.
“I think in a week or so, no one will talk about it anymore. Instead, people will look at what the government decides and is doing,” he said CNBC.
One way or another, hard work really just starts for the new Chancellor and Prime Minister of the Coalition, which consists of its Christian Democratic Union, with its partner of the Christian Social Union and the Social Democratic Party.
Some of the problems include solving the division in the country about issues such as migration, geopolitical tensions over the cost of defense and trade, stagnation that stagnated the economy and management coalition of the united and in accordance.
Economic trouble and pressure
Germany’s economy will become a great mind for the Merza that did promises reforms and new investments and harshly criticize The previous government’s policy during the election campaign.
For more than two years, there has been an alternation of economic expansion and reduction of each quarter. The annual growth of the gross domestic product was negative in both 2023 and 2024. The last forecasts It seems like it doesn’t indicate a big respite.
It is despite Main Financial Package During their coalition negotiations, CDU/CSU and SPDs, which include changes to long -standing debt rules to provide more protection costs and $ 500 billion ($ 567 billion) infrastructure and climatic investments.
Cash money is at least safe, but there were questions about other fiscal and economic policy, said the Ing BRZ.
“I think the 500 billion infrastructure package will not be affected and the transaction is made,” BRZSKA said. “All other measures, as well as faster writing for investment or reducing corporate taxes in 2028, became even more uncertain than before,” he added, linking it to the now increased risk of potential contractions about the country’s budget.
Franziska Palmas, the elder economist in the capital economy, also sees that the fiscal package is being realized as planned.
“We believe that this will give a significant growth of GDP growth and deprive German with stagnation after six years,” Palms CNBC said, “but noted that he was a clear discontent in the coalition factions, the risk of such stimulation, which has been or more time.
According to Otto Freke, there was another key issue affected by the upheaval on Tuesday – it may be vital for government economic policy plans.
“The problem is actually at the end, it is about the most important question in politics: trust,” he said, talking to CNBC “Europe Early edition“Wednesday. The German economy requires changes, and quickly if the goal is to grow, Fickke said.
“That’s why you need confidence in the office in parliament to quickly make legislation.”
Political consensus despite tensions?
Palles of the capital of the economy pointed to the promise of Merza that his government would be more stable than the previous one, which eventually collapsed about disagreements about economic and financial issues.
However, after the difficult beginning of his term, “the risk that he will not be able to fulfill his promise that he will work much more effective and without conflicts compared to the previous road coalition,” she said.
But despite the obvious tension and increased instability, de -la Ruby commercial Bank Hamburg noted that, as emphasized by their joint coalition agreement, CDU/CSU and SPD, not so far but politically.
For example, everyone should agree to the need for investing in the railway, roads, bridges and other infrastructure through the fund, and consensus in the field of defense must also be found without “bitter conflicts,” he said.
Thus, while in the first round of Merz on Tuesday, there may have been an attempt by parliamentarians to teach him the lesson, it should not mean that the new government will get rid of big changes, said de la Rubia.
“This does not mean that this should not mean that they should refrain from carrying out the necessary reforms against the modernization of the infrastructure, to reduce the red tape, especially when it comes to the processes of approval of construction work, wind farms and power grids, improve digitization processes and take measures to reduce work,” he said.
“I have little doubt that the new government will be able to implement its great political goals”
