Germany’s Conservatives and Social Democrats Reach Coalition Deal

Germany’s conservative and centre-left parties have reached a deal to form a new government after weeks of negotiations, ending months of political uncertainty in Europe’s largest economy. Friedrich Merz, leader of the centre-right Christian Democratic Union (CDU), is expected to succeed Olaf Scholz as chancellor.

The parties involved—Merz’s CDU/CSU bloc and Scholz’s Social Democrats (SPD)—announced they will hold a press conference on the agreement at 3 p.m. CET on Wednesday.

Merz’s Union bloc emerged as the strongest force in Germany’s February federal election but fell short of a majority, prompting negotiations with the SPD to secure parliamentary control. However, Merz’s formal election as chancellor is unlikely before early May, as the coalition deal still requires approval from SPD members and a CDU party convention.

Key Policy Shifts and Economic Challenges

Details of the agreement have not yet been made public, but last month, the outgoing parliament passed measures to loosen Germany’s strict debt rules, enabling higher defense spending and the creation of a €500 billion infrastructure and climate fund.

This marked a reversal for Merz, whose party had previously opposed new borrowing but shifted amid growing economic pressures. Germany’s export-driven economy has contracted for two consecutive years, and the new government will face urgent demands to revive growth.

The coalition talks were also influenced by global instability, including U.S. President Donald Trump’s imposition of sweeping tariffs, which threaten to further strain Germany’s economy. Additionally, doubts about U.S. commitment to European security—highlighted by Trump’s tense meeting with Ukrainian President Volodymyr Zelenskyy in February—pushed the parties to prioritize defense investments.

"The U.S. is no longer a reliable partner in security policy," Merz said last month, emphasizing that Europe must strengthen its defense capabilities.

Political Landscape and Next Steps

The prolonged negotiations came after Scholz’s unpopular "traffic light" coalition collapsed in November, triggering early elections. The far-right Alternative for Germany (AfD), which finished second in February, gained support during the political vacuum, adding pressure for a swift resolution.

The new coalition—comprising Germany’s traditional postwar powerhouses—will hold 328 seats in the 630-member Bundestag. According to German news agency DPA, the CDU is set to take control of the Foreign Ministry for the first time in nearly 60 years, while the SPD will oversee finance and defense. The CDU/CSU bloc is expected to lead the Interior Ministry.

Alexander Dobrindt, head of the CSU’s parliamentary group, confirmed that Merz is likely to be elected chancellor in early May, pending SPD member approval. "The final sprint has begun," Dobrindt said, expressing confidence in a "very good result."

The SPD will submit the coalition deal to a membership vote, while the CDU and CSU will seek approval from a party congress and steering committee, respectively. Once ratified, Germany’s new government will face immediate challenges, from economic revival to bolstering European security in an increasingly uncertain geopolitical climate.