German Chancellor Friedrich Merz has called for confidence in Germany’s economic strength while acknowledging the challenges facing the country. Speaking before the start of the government’s two-day cabinet meeting in Neuhardenberg, Brandenburg, on Tuesday, Merz said Germany had significant potential and should not underestimate its own strengths.
Merz pointed to Germany’s strong industrial base as one of the country’s key advantages. He said Germany remained capable of competing in global markets and could even serve as a model for others, provided the government created the right conditions for businesses and the wider economy.
The government’s goal, according to Merz, is to overcome the current period of weak economic growth and create the conditions for renewed economic expansion and higher employment. He highlighted Germany’s strong Mittelstand, its internationally respected skilled trades sector and its world-class researchers as important foundations for future growth.
Merz said these existing strengths should be used to support growth and employment in the years ahead, particularly as Germany adapts to technological changes and the growing importance of artificial intelligence.
A central focus of the cabinet meeting is Germany’s industrial future. During the meeting, the government plans to engage directly with representatives from industry and the skilled trades, as well as technology companies and start-ups. Merz said the government would concentrate on how Germany can preserve and strengthen its industrial base. His stated goal is for Germany to remain a strong industrial country and to stay among the global leaders in the age of artificial intelligence.
The chancellor also pointed to challenges originating outside Germany. These include the changing climate, trade conflicts, global economic imbalances and security concerns. According to Merz, these factors are contributing to the difficulties currently facing the German economy.
Merz said the government wants to create new prospects for businesses and people in Germany through reforms that have already been initiated. He also said the government was preparing measures for the remainder of 2026.
However, no specific decisions are expected to be adopted during the two-day retreat itself. Instead, the discussions are intended to help shape the government’s further work and priorities.
Alongside economic issues, Merz also addressed climate change and its consequences. He said Germany must continue efforts to limit climate change while also adapting the country to its effects. The government is expected to discuss the issue in greater detail on Wednesday. Merz said the focus would be on drawing longer-term lessons from extreme situations such as the current summer of heat.
Merz pointed to drought, extreme heat, forest fires and crop failures as evidence of the need for action. He said these developments were causing significant damage and affecting many areas of everyday life. Health services, hospitals, nursing homes and agriculture are among the sectors affected by heat and drought, according to the chancellor. He referred to his visit to the wildfire area near Hürtgenwald in North Rhine-Westphalia over the weekend, where he had seen the situation first-hand.
On Wednesday, individual government ministries are expected to present their assessments of the consequences of climate-related extreme events. The government will then draw conclusions, with Merz saying these should eventually lead to concrete decisions in subsequent cabinet meetings.
Merz has previously faced criticism over what opponents describe as insufficient attention to climate change and its consequences. Environmental groups, the Greens and the Left Party have also accused the government of weakening or easing climate protection rules in various areas.
During his visit to Hürtgenwald, Merz was met with whistles from protesters. Meanwhile, demands to establish climate and heat protection as a joint responsibility of the federal and state governments in Germany’s Basic Law have so far been rejected by the CDU and CSU. The cabinet meeting therefore brings together two major challenges identified by Merz: strengthening Germany’s economic and industrial foundations while addressing the growing consequences of climate change.
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