Germany's ruling coalition kicked off crunch talks on key reforms Wednesday, with success seen as crucial to boosting Europe's beleaguered top economy and countering the appeal of the far right. "My expectation is that we will make a major leap forward in the modernisation of our country," Chancellor Friedrich Merz said ahead of the talks on issues from labour and taxes to digitalisation.
Merz's centre-right CDU party and their centre-left coalition partners, the SPD, have been struggling for months to agree on a series of thorny issues. These range from raising the retirement age, to overhauling the healthcare system, easing the tax burden on the middle class and slashing red tape.
The process has been repeatedly delayed due to squabbling, but key figures insist they are determined to reach a deal before parliament's summer break at the end of this week.
"While we have to grapple with one another, in the end we have to reach results and get things across the finish line this week," senior SPD lawmaker Dirk Wiese told public broadcaster ARD. "That is what we're aiming for."
Merz is chairing the talks in the chancellery in Berlin. Others attending include the SPD's Lars Klingbeil, who is vice chancellor and finance minister, as well as SPD Labour Minister Baerbel Bas. It is not clear how long the talks will last, or when any results might be announced. There is already broad consensus on some issues, like pension reform, with the parties recently agreeing that the retirement age should gradually increase beyond 67.
But they remain far apart in other areas, such as how to overhaul taxes and the system of working hours. There is no time to lose however, industry groups argue, complaining that the long-stagnant economy is being held back bureaucratic burdens, high costs and rigid labour rules. "The coalition must now deliver a comprehensive reform package to boost growth and competitiveness," said Tanja Goenner, chief executive of the Federation of German Industries.
The coalition is also keen to show it can get to grips with the country's problems to diminish the appeal of the far-right Alternative for Germany (AfD), which has been topping national opinion polls for months.
Key elections are taking place in strongholds of the party in eastern Germany in September, which could produce the first-ever AfD-led state government. By successfully pushing through economy-boosting reforms, the coalition could go some way to keeping the far right at bay, said Berenberg bank chief economist Holger Schmieding.
"Renewed economic growth could help to contain the appeal of the AfD to voters who are currently disaffected," he said.
From breaking news to thought-provoking opinion pieces, our newsletter keeps you informed & engaged.
By subscribing, you agree to our Terms & Conditions and Privacy Policy.
