Friedrich Merz will be the next German chancellor. However, his win may not bring about the stability that many voters hoped.
In 2025, the German election will mark a turning point with the sharp shift to the right and collapse of the centre-left.
Merz’s CDU/CSU won the majority of votes but fell short in achieving a solid majority. This complicates the road to a stable government.
AfD, the far right party, surged into second place making it even harder to form a coalition. The next government faces significant challenges, including economic stagnation and an ageing population.
Germany’s reputation as Europe’s stability pillar is now in serious doubt.
Do voters get what they want?
Voters’ message was very clear: They wanted change.
This election was attended by 84% of the electorate, the highest turnout since 1990.
The results are more complex.
CDU/CSU came out on top with 28,5%. This is a good lead, but not a majority.
With only 16.4%, the SPD government that led previous governments suffered their worst defeat since 1990.
The Greens remained at 11,6% while the FDP dropped to 5%, not reaching the threshold required to remain in Parliament.
AfD was by far the biggest winner. In 2021 they doubled their popularity, and secured 20,8% of the vote. They became Germany’s 2nd largest party.
The East was the strongest region, as many voters there felt that Berlin’s policy had left them behind.
The AfD, on the left, and the Left Party, on the right, are the two parties that have the most support among young voters. Traditional parties, like the CDU or SPD, struggle to gain youth votes.
This election did not produce a clearly defined mandate.
CDU/CSU faces a difficult task in forming a new government. However, their options are very limited.
A coalition headache for Merz
Germany, unlike other European nations does not permit minority governments.
Merz will need a partner in a coalition to be able to govern.
Germany has a system that requires the majority of seats in the Bundestag (50%+1) to elect a chancellor and pass legislation. This means parties are forced to form coalitions if no party is able win outright.
CDU/CSU has ruled out working together with AfD citing significant disagreements over NATO, euro and foreign policy.
The only real partners are the Greens or SPD.
They are both reluctant to accept Merz, in part because his policies of deregulation, immigration and tax reductions conflict with their own.
There’s still a possibility that the SPD will not enter government. They are still recovering from their worst results in modern times.
Some leaders of parties have proposed letting their party members vote on any deal that involves a coalition, making things more complex.
Germany may face political instability if no agreement is reached.
As the formation of a new government takes longer, confidence in both home and abroad will decrease.
Germany’s economy: Can it be fixed?
The biggest threat to Germany is not politics but its economy.
Two years of recession in the economy has left no signs of recovery.
The growth forecasts for the next decade are dim. German Council of Economic Experts forecasts a growth rate of only 0.3% to 0.4% per year in the next decade. This is far below the average 1.4% from 2000-2019.
Germany’s rapidly aging population is the main cause.
In the next four-year period, only 3.1 millions young Germans will join the work force, as 5.2 million retirees.
This imbalance is likely to shrink the workforce, raise pension costs and put strain on the federal budget.
As healthcare costs rise, so do social security contributions. These are high, already at 42 percent of the gross earnings, and are making it difficult for workers and businesses.
Merz promised that he would implement “Agenda 2030”, a plan to revive the economy by reducing taxes, deregulating, and providing incentives to older workers so they can stay in employment.
It is unclear how he will pay for his policies, particularly with the coalition partner who may not be receptive to some of his conservative views.
Germany is turning against America
Germany is facing political and economic difficulties at the same time that its relationship with America is declining.
Merz made it very clear that European security is his top priority.
Merz said that after Donald Trump returned to the White House Washington’s commitment towards NATO was no longer assured.
“America First may mean America alone.”
Merz thinks that Germany, the EU and even America might have to increase their military capabilities. This is especially true now that Trump has shifted his allegiance to Russia.
It’s a huge deal for Germany.
Germany relies on US guarantees of security since World War II. This could change, and Germany will have to spend more on defense than the EUR28 billion it has already committed to Ukraine.
This would add to the already tight budget.
Moreover, tensions in trade with the U.S. may also hinder Germany’s recovery.
Both sides have protectionist policies that threaten German exports. This is especially true in manufacturing and the automotive industry.
What is next for Germany
The German election results clearly show that the voters are ready for change.
CDU/CSU has won the election, but it is still far from clear how they will form a new government.
Demographic shifts and the slowing economy will limit growth.
The relationship between Germany and the United States is changing in a way that may force Germany to assume new responsibilities for which it’s not fully prepared.
The biggest threat is not economic stagnation, or even political gridlock. It’s the lack of confidence.
Extremist parties such as the AfD could grow stronger at the next elections if the government fails to meet voter expectations.
According to experts, Germany faces its greatest challenge since its unification.
The ICD published the article Germany’s Election Shock: Key Results, Implications, and What’s Next?
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