Friedrich Merz Set to Become Chancellor Amid Economic Challenges

Germany is set to enter a new era as conservative leader Friedrich Merz is poised to become chancellor following the collapse of Olaf Scholz’s coalition government, with broad parliamentary backing expected due to a coalition agreement between the CDU/CSU and the Social Democrats. Merz’s government inherits a nation beset by economic recession, strained transatlantic alliances, and the rise of the far-right Alternative für Deutschland party. In response to global instability, including the war in Ukraine and uncertainties about future U.S. support for NATO, the Bundestag recently amended the constitution to allow up to €1 trillion in borrowing for defense and infrastructure. Merz’s cabinet will feature both experienced politicians and newcomers from the private sector, with SPD’s Boris Pistorius remaining as defense minister and Lars Klingbeil as finance minister. The new government’s agenda includes reviving economic growth, lowering corporate taxes and energy prices, and maintaining support for Ukraine while seeking to assert greater European self-reliance in defense. The leadership transition is widely viewed as pivotal for Germany and Europe, with observers emphasizing the need for Germany to take a more assertive role on the continent.