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Merz’s dilemma: Redraft German economic reforms, or go down defending them

Merz’s dilemma: Redraft German economic reforms, or go down defending them

politico.eu 22.09.2026 04:00 6 views
Chancellor insists his reforms are needed to revive the economy and competitiveness, but the proposals are turning off voters.

BERLIN — Friedrich Merz faces a stark choice: Reshape the unpopular reform drive on which he has staked his chancellorship — or risk going down defending it. The day after his conservatives’ worst election defeat in postwar German history and the far-right Alternative for Germany party’s second win in two weeks in votes in the east of the country, Merz acknowledged that the German public’s rejection of his reform drive was a big part of his party’s problem. But he exhibited no clear plan for what to do about it.

Leaders from Merz’s Christian Democratic Union publicly closed ranks around the chancellor and his reform drive on Monday, despite growing internal concern that his leadership is rapidly driving their party toward demise. In truth, they have little choice. The alternative — an attempt to replace him — is too divisive and risky at a time when the AfD is leading in polls, and the Kremlin is threatening Europe in increasingly aggressive terms.

Merz suggested he recognized the scale of the alarm inside his party. But then the chancellor offered little more than a promise to come up with a plan — saying he had scheduled meetings with CDU leaders and state premiers in the coming days to discuss how they should chart a new course. It is the historic task of the coalition here in Berlin — and of the political center as a whole — to prepare our country to face all these challenges in the years ahead.” Economists argue the reforms Merz wants, such as overhauls of the public pension and healthcare schemes to make them more sustainable as the country’s population rapidly ages and costs skyrocket, are essential to reviving Germany’s competitiveness.

Whereas previous governments avoided tackling such reforms due to the political perils of measures like raising the retirement age and trimming health insurance benefits, Merz has embraced the task. He has dubbed himself the “reform chancellor” and argues that he’s tackling a generational task on par with rebuilding Germany after World War II. But voters view the reform drive — and the way Merz has often taken a lecturing tone when promoting its necessity — in overwhelmingly negative terms.

In late August, a survey by the Hans Böckler Foundation of the German labor union association found that about 81 percent of respondents were concerned about their financial security as a result of the government’s reform push. The same poll found 42 percent were cutting back on their consumer spending as a result of those fears. This is a problem that CDU leaders now admit.

On Monday, Merz again moved to quell suggestions he would step aside in a so-called Kanzlertausch — or chancellor swap. Not a single person,” Merz told reporters in Berlin. Prien was among the CDU leaders who publicly closed ranks — but, notably, her endorsement of the chancellor was not exactly glowing.

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