Germany’s conservative election winner, Friedrich Merz, came a step closer on Saturday to forming a government that he says will revive Europe’s top economy and its armed forces with massive new spending.
The bold moves are part of his plan to rebuild Berlin’s standing in Europe, which Merz has said must respond to the sweeping changes driven by the US president, Donald Trump, that have rocked the transatlantic alliance.
Merz’s CDU/CSU bloc and the Social Democrats (SPD) of the defeated chancellor, Olaf Scholz, on Saturday announced they had wrapped up exploratory talks and would move on to the decisive stage of fully fledged coalition negotiations.
“We concluded the consultations between CDU/CSU and SPD, and we have drawn up a joint exploratory paper,” Merz said.
He praised the “extremely good and very collegial atmosphere” of the talks that had passed a major hurdle less than two weeks after the 23 February elections.
Merz said both sides shared “the conviction that we have a great task ahead of us”. He said all were “aware of the great challenge we are facing – above all the international situation, but also … facing the whole of Europe”.
Merz said both sides had agreed on tough new steps to limit irregular immigration, including refusing all undocumented migrants at the borders, even those seeking asylum.
The move was a key demand of Merz, who has stressed the need to win back voters from the far-right Alternative for Germany (AfD), which scored a record of more than 20% in the election.
Lars Klingbeil of the SPD called Saturday’s deal “an important first step” and said both sides agreed on the need to “get our country back on track”. He said his party had won assurances on key demands, such as a €15-an-hour minimum wage from 2026 and stable pensions.
The plan is for Germany to have a new government by mid-April that would end half a year of political paralysis after Scholz’s three-way coalition imploded in November.
The probable future governing allies have already surprised European partners with their plan to spend hundreds of billions of euros to revive the ailing economy and rebuild the military.
The ambitious plans would cast aside Germany’s historic reluctance to take on large-scale debt and see it invest in defence on a scale not seen since the second world war.
The spending boost – which Merz’s Bavarian ally Markus Söder has termed an “XXL”-sized splurge – comes in response to Trump and his administration casting doubt in Europe on the future strength and reliability of the Nato alliance.
Alarm at Trump’s actions has added urgency to the talks, spurred by his public berating of his Ukrainian counterpart, Volodymyr Zelenskyy, in a White House meeting.
The two parties are moving to talks on a detailed formal coalition agreement, including haggling over cabinet posts. Their spending plans would circumvent Germany’s constitutionally enshrined debt brake and exempt defence spending when it exceeds 1% of GDP.
The parties also agreed a €500bn (£420bn) fund to invest in creaking infrastructure over 10 years.
The SPD has long pushed for action on Germany’s economy, which has been mired in two years of recession. Merz voiced hopes on Saturday that the stimulus would help the economy grow by “one, preferably two, per cent”.
However, both proposals will need a two-thirds majority in the outgoing parliament, with the two big blocs needing the Greens’ cooperation.
Merz said new investment could flow into climate projects and voiced confidence that “we will find a way together to achieve a constitutional amendment”.
But the Greens’ co-chair Felix Banaszak warned they were “further away from an agreement today than we have been in recent days”, criticising the fact that “climate protection financing plays no part” in the joint document.
The CDU/CSU and SPD are in a hurry to push the changes through before a deadline looms. On 25 March the newly elected parliament will convene. From then on, the AfD and the far-left Linke will be able to block any such proposals.
