German Chancellor Merz Warns Welfare State No Longer Financially Viable

German Chancellor Friedrich Merz has issued a stark warning that Germany's welfare state is no longer financially sustainable amid economic stagnation and rising social spending. With social security costs hitting a record €47 billion last year and continuing to grow, Merz emphasized the urgent need for fundamental reforms to the social insurance system, including health, pensions, and unemployment benefits. While Merz ruled out tax increases on medium-sized companies, his Social Democratic coalition partners have not excluded tax hikes on higher incomes to help address budget gaps, highlighting a looming clash within the government. The economic slowdown, demographic challenges such as an aging population, and rising unemployment have intensified pressure on welfare finances, with a significant portion of benefit recipients being non-German citizens. Merz also linked welfare reform to immigration policies, advocating stricter controls and longer residency requirements for citizenship. Despite the challenges, coalition leaders have expressed a commitment to reform while ensuring social justice and support for vulnerable populations, though disagreements over the depth and nature of cuts remain.