Germany's conservative CDU/CSU bloc and Chancellor Olaf Scholz's Social Democrats (SPD) have agreed to begin formal coalition negotiations following marathon exploratory talks, signaling progress toward stabilizing Europe's largest economy. CDU leader Friedrich Merz confirmed the breakthrough on Saturday, citing consensus on migration, fiscal reforms, and a sweeping 500-billion-euro infrastructure package.
The negotiations, set to shape Germany's post-election trajectory, aim to address economic stagnation and global security concerns. Key agreements include tightening asylum processes at land borders, revamping unemployment benefits, and reducing energy costs for industries. A central pillar is the exemption of defense spending from constitutional debt limits, reflecting heightened focus on military modernization amid shifting NATO dynamics under U.S. leadership.
Merz, poised to become chancellor, emphasized revitalizing Germany's industrial base while balancing fiscal discipline. Analysts suggest the proposed infrastructure investments—targeting transport, energy grids, and digital networks—could create opportunities for Asian exporters and investors eyeing European supply chains.
The coalition talks follow a Feb. 23 federal election that left no party with a majority. Observers note that Merz's alignment with SPD priorities marks a pragmatic shift, though finalizing coalition terms may test compromises on labor policies and green transition timelines.
