Merz calls on the coalition to implement decisive reforms to strengthen the economy

German Chancellor Friedrich Merz (CDU) has urged coalition lawmakers from the CDU/CSU and the SPD to pursue decisive reforms to strengthen the economy, warning that parts of Germany’s economic situation are “very critical.”

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In a four-page letter to coalition members, seen by AFP on Tuesday and dated Sunday, Merz wrote: “The situation of the German economy is very critical in some areas.” He warned that “major industrial sectors, as well as significant parts of small and medium-sized businesses and skilled trades, are facing enormous challenges, and jobs are being lost in many companies.”

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Merz said the coalition would therefore need to focus in 2026 on “taking the right political and legislative decisions to fundamentally improve Germany’s location conditions.” He added: “Only in this way can the German economy grow again and emerge from the crisis, and only in this way can jobs be preserved and new ones created.”

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He stressed that it was clear “that productivity in Germany is simply no longer good enough under the changed global economic policy conditions.” Merz pointed to “labor costs, energy costs, bureaucratic burdens, and tax burdens” as being too high, adding: “We will have to work on this together.” Referring to the ongoing challenges posed by the war in Ukraine, Merz wrote that Germany is heading into “a year 2026 that will be demanding in every respect.” He added: “A great deal of work lies ahead of us.”

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Looking at the coalition government’s record so far, Merz said “much has already been set in motion,” citing a “course correction in migration policy” and initial relief measures for households and businesses, particularly on energy costs. However, he acknowledged that “not everything has worked as well as we had intended.”

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With regard to the challenges ahead, Merz expressed confidence: “We can solve most of our problems ourselves.” If that succeeds, he said, “we will also strengthen cohesion in our society and strengthen trust in politics.”

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