Coalition negotiations between the CDU/CSU and SPD.
Michael Kappeler | Picture Alliance | Getty Images
Germany’s centrist parties on Wednesday finalized a coalition agreement, paving the way for the Christian Democratic Union, Christian Social Union and Social Democratic Party to form the country’s new government.
Party members must now sign off on the deal before the new government can assume its post.
“This coalition agreement is a signal of departure and a powerful statement for our country,” CDU leader Friedrich Merz — who is poised to become Germany’s next chancellor — said during a press briefing, according to a CNBC translation.
“The future coalition will reform and invest to keep Germany stable, make it safer and economically strengthen it. Europe too can rely on Germany,” he added.
Negotiations between the parties began soon after the German election in February, but ran into hurdles in recent weeks after initial strong progress with the talks prompting a major fiscal reform package. Policies around taxes, the federal budget and migration were widely seen as contentious points among the parties.
Pressure was especially mounting on Merz to avoid too many concessions to the SPD. The center-left CDU, alongside its sister party the CSU, had secured the biggest share of votes in the election.
The SPD, which is outgoing chancellor Olaf Scholz’ party, meanwhile came third in the elections behind the far-right Alternative fuer Deutschland.
An unusual negotiation backdrop
German coalition negotiations took place against an unusual geopolitical backdrop, including U.S. President Donald Trump’s tariffs and associated economic fears for export-dependent Germany, as well as the White House’s involvement in the Russia-Ukraine war.
Questions have lingered whether the U.S. would continue supporting Ukraine with financial and humanitarian aid, while the Trump administration has been pressuring NATO members to step up their defense spending.
“Just this week, decisions made by the U.S. government have triggered new turbulences. We can witness the reactions in real time, so to speak,” Merz said Wednesday. “We do not know in which direction the international situation will develop. But that is why our message today is even clearer — we want to, and we will, help shape the changing world for Germany.”
Germany has had to navigate these turbulent times with a de facto caretaker government in place.
Merz and his fellow negotiators had therefore set the goal of a coalition agreement being finalized before the Easter holidays later this month.
— CNBC’s Lily Meckel contributed reporting to this story.
