Merz's Strained Coalition

Assessed at the symbolic '100 days' point of a turbulent year, Chancellor Friedrich Merz shifted from his initial backing of US-Israeli strikes on Iran — when he avoided calling them a 'violation of international law' and branded Iran a 'terrorist regime' — to criticising the US for lacking a 'convincing strategy' after economic fallout from the Strait of Hormuz closure and domestic political pressure. The reversal prompted US President Trump to announce the withdrawal of 5,000 US troops from Germany and to impose tariffs on EU car exports. Merz now advocated greater German independence from the United States. The episode showed how external shocks fed directly into the chancellor's standing and room for manoeuvre at home.

Amid declining support for the SPD and FDP, the Greens and CDU signalled openness to a future coalition, with Green co-leader Franziska Brantner praising CDU figures Konrad Adenauer, Helmut Kohl and Wolfgang Schäuble while CDU politicians noted convergence on security and Russia policy. The newly formed Green–CDU government in Baden-Württemberg under Minister-President Cem Özdemir was cited as the working model, though national cooperation faced internal resistance over migration and climate. Analysts mapped scenarios for a federal black-green coalition, including the possibility of the current CDU/CSU–SPD government ending prematurely, with NRW premier Hendrik Wüst floated as a potential figure. The speculation reframed the SPD as a replaceable partner.

Finance Minister and SPD leader Lars Klingbeil faced mounting tension between his dual roles as he enforced austerity — including potential cuts to housing and parental benefits — to address a widening budget deficit worsened by lower growth forecasts. The push sparked internal unrest within an SPD that traditionally champions social spending and strained coalition dynamics with the CDU/CSU. His attempt to balance fiscal consolidation against social commitments coincided with the SPD's poll rating falling to 12% and criticism from both coalition partners and the public. The episode put the coalition's load-bearing figure under pressure from his own base.

The CDU/CSU–SPD coalition turned its promised 2027 income-tax cut into a test of whether the two partners can govern together, agreeing on relief for low and middle earners (€100–400/year for those on €2,500–3,000 gross monthly from 1 January 2027) but splitting openly on who pays. Klingbeil's SPD wants the bill met by raising the 42% top rate, lifting the 45% wealth surcharge to 47.5% and trimming inheritance-tax exemptions; Merz and the CDU/CSU refuse a top-rate rise, while the SPD and CSU veto the VAT route — leaving the €20–30bn financing question deadlocked. The only emergent compromise, a top rate above €277,826, raises little and satisfies neither bloc, though CDU finance spokesman Fritz Güntzler's openness to a higher 'rich tax' hinted the Union's discipline might crack before the recess deadline.

In a Focus interview, former chancellor Angela Merkel called on the public to judge Merz's coalition with 'moderation and balance' amid widespread dissatisfaction, defended compromise as essential to governing, and criticised the tendency to brand political debate as 'conflict'. She advised Merz directly to show a 'generous spirit' toward his coalition partners. NRW premier Hendrik Wüst separately warned against downplaying the AfD threat. The intervention from the CDU's most successful modern leader was an implicit critique of Merz's combative style toward the SPD.

After the Bundesrat rejected a proposed tax-free €1,000 employer bonus, state premiers from both the CDU/CSU and SPD — including Markus Söder (CSU, Bavaria) and Manuela Schwesig (SPD, Mecklenburg-Vorpommern) — publicly declared the bonus 'dead' and urged Berlin to abandon it, calling instead for comprehensive income-tax reform. Söder ruled out raising the 42% top rate or inheritance tax but left the 45% wealth-tax bracket open for debate, while Schwesig proposed a 'concerted action' of federal, state, local governments, unions and employers. The federal government left open whether to invoke the mediation committee, with a coalition committee set to meet the following Tuesday. The episode showed the Länder dictating the menu of options to Berlin.

A Forsa poll found only 13% of Germans satisfied with Chancellor Friedrich Merz and 11% with the government overall, with 89% dissatisfied on the economy, inflation and social issues; only 17% rated Merz better than his predecessor Olaf Scholz. A parallel DeutschlandTrend poll confirmed government satisfaction at 13% and Merz at 16% — the worst ratings recorded for any sitting chancellor. Analysts blamed broken campaign promises, poor communication and a lack of self-criticism. The far-right AfD led the party polls, with absolute majorities flagged as possible in eastern states ahead of upcoming state elections.

A new INSA survey found that 58% of Germans believe the conservative-led coalition will collapse before the 2029 federal election. The far-right AfD led with 28% support, ahead of Merz's CDU/CSU at 24% — meaning the senior governing party trailed the opposition it refuses to work with. The poll crystallised the gap between the coalition's formal three-year mandate and public expectations of its survival. It set the backdrop against which Merz spent the following week publicly ruling out any early exit.

Finance Minister Lars Klingbeil announced he would present a tax-reform concept within weeks, aiming to significantly relieve small and middle incomes while making high earners contribute more, targeted to take effect on 1 January 2027. He stated openly that the financing remained disputed within the coalition. The move staked out the SPD's central economic demand — redistribution through the tax code — as the test of the government's second year. It framed the deadlock that would dominate May: relief everyone backs, financing no two partners agree on.

On May Day, German trade unions led hundreds of rallies nationwide against the coalition's proposed cuts to pensions, healthcare and social benefits, under the motto 'First our jobs, then your profits'. DGB chair Yasmin Fahimi warned of a 'return to early capitalism' and threatened a major social conflict if pension security were attacked. The unions demanded higher taxes on the wealthy, including a wealth tax and higher inheritance tax — aligning their fiscal demands with the SPD's coalition position against the CDU/CSU. The mobilisation set the confrontation between organised labour and Merz's reform agenda that would erupt at the DGB congress eleven days later.

The CDU/CSU–SPD coalition completed its first year marked by conflicts over pension reform, migration, an infrastructure fund and Israel policy, including a contested constitutional-court nomination and a public row over welfare-state language. Merz demanded more compromise from the SPD, warning 'compromise is not a one-way street', while SPD leader Klingbeil drew red lines on labour rights — opposing any waiting days for sick pay or abolition of May Day as a holiday. The dispute had first erupted over energy prices, with Economy Minister Reiche sharply rejecting Klingbeil's proposed windfall-profit tax. Both sides conceded excessive infighting; the Greens called the government 'a ship without a helmsman', the AfD demanded early elections, and Merz admitted no one could guarantee the coalition's survival.

On the eve of the first anniversary of Merz's chancellorship, the CDU/CSU–SPD coalition reached last-minute agreements on a healthcare reform (a €16.3bn savings package, trimmed from €19.6bn) and a building-modernization law, averting a major rupture. CDU/CSU group leader Jens Spahn and MP Christian von Stetten had publicly questioned the coalition's cohesion, with the government described as in its 'most difficult phase'; Merz and SPD Vice-Chancellor Lars Klingbeil staged unity, including a joint Instagram video. The deals shifted the conflict to the parliamentary phase, where the coalition's slim majority faces rebel factions, and teed up further tests on income-tax reform, pensions and the heating law. The Union opposed new debt while the SPD floated suspending the debt brake over the Iran conflict.

At the close of a CDU/CSU parliamentary-group retreat in Berlin, faction leader Jens Spahn urged the governing coalition to improve cooperation and stop public infighting, conceding the coalition was 'out of step' and that its poor public image was fuelling support for the far-right AfD. He signalled a concession to the SPD on a sugar tax on soft drinks, framing it as preventive children's health policy. CSU first parliamentary secretary Alexander Hoffmann stressed the coalition needed to be seen as caring rather than cold. The retreat closed with the Union pushing 'bold structural reforms' and strict austerity while expressing open frustration at the SPD's pace on health, pension and tax reform.