Leaders of Germany’s center-right Christian Democratic Union (CDU) and center-left Social Democrats (SPD) addressed the press on Thursday as negotiations to form a new government advanced to the next stage.
Friedrich Merz, CDU leader and the likely next chancellor, acknowledged remaining "some hurdles ahead" but expressed confidence that the parties would reach an agreement. Bavarian Minister President Markus Söder (CSU) and SPD co-chairs Lars Klingbeil and Saskia Esken also voiced optimism about the ongoing coalition talks.
The discussions are now expected to focus heavily on financing election promises, including potential tax cuts and revenue measures.
Negotiations Shift to Policy and Budget Priorities
Exploratory talks between the conservative bloc—comprising Merz’s CDU and its Bavarian sister party, the CSU—and the SPD concluded earlier this week with a 162-page draft agreement. Party leaders must now refine the document into a formal government program.
"We need to come up with a common vision of how we imagine Germany over the next 10 years," Merz told reporters outside SPD headquarters—a building he noted he was entering for the first time.
He acknowledged that proposals from 16 specialist working groups contained contradictions, with some teams treating their mandate as a "make a wish" exercise. However, he added, "Our personal trust in each other has been growing over the past few days, so I'm optimistic."
Key sticking points include migration, economic policy, and budget constraints. "The number of migrants coming to Germany must come down quickly and sustainably," Merz said. "The second topic will be the competitiveness of our economy ... And then we will have to discuss the budget. We will have to save comprehensively."
Taxes and Policy Divides Loom Large
The next phase of negotiations is expected to center on financing, with the CDU pushing for corporate tax cuts starting next year, while the SPD prefers reductions from 2029. The SPD also seeks higher income taxes for top earners—a measure the CDU opposes.
Further disagreements include border policies for asylum seekers, pension reforms tied to raising the retirement age, reinstating military conscription, and the EU’s 2035 ban on combustion engines.
Once an agreement is reached, SPD members will vote on the coalition deal in a process expected to take 10 days—though officials aim to avoid scheduling the ballot over the Easter holiday.