Merz Battles Coalition Infighting as Germany Faces Fragile Recovery

Friedrich Merz entered his first year as chancellor with his coalition already under pressure from the disputes that could decide whether Germany can still govern itself effectively. The fight is not about one bill or one minister. It is about whether the Christian Democratic Union, the Christian Social Union and the Social Democratic Party can still agree on taxes, pensions, welfare and health reform while the economy remains too weak to absorb another round of political paralysis.

The coalition agreement signed on May 5, 2025, had promised tax relief for low- and middle-income households, plus bureaucracy reduction, deregulation and more investment in infrastructure, energy and new technologies. A year later, those pledges have run into budgetary holes and social policy battles that have left the government struggling to turn a reform agenda into a workable program. That matters because a coalition built to restore competence now has to prove it can still pass the kind of changes that affect public finances, industrial competitiveness and social stability.

The governing scorecard is increasingly grim. Tax relief demands money the federal budget does not have in abundance. Pension changes are politically explosive because they affect older voters and long-term spending. Welfare and health reforms are equally difficult, because any savings or eligibility changes risk angering both voters and SPD lawmakers. Even bureaucracy reduction and deregulation, the easiest items on paper, require coordination the coalition has not consistently shown. If these disputes harden, the result is not just a broken alliance. It is a government that can remain in office while losing the ability to legislate.

Merz has tried to project control. He said the mood in Germany was “very critical” and “palpable,” but dismissed talk of early elections, asking, “What on earth would come of that?” He added that the government “must succeed with this coalition.” That urgency reflects more than political pride. Germany’s recovery has been too fragile to rely on momentum alone.

The European Commission said Germany’s real GDP in 2024 was roughly back at 2019 levels, while exports fell 2.1 percent and the economy stagnated in the first half of 2025. The Bundesbank had already projected a 0.2 percent GDP decline in 2024 and growth of only 0.2 percent in 2025, warning that U.S. protectionist trade policy and uncertainty were clouding the outlook. A further energy shock tied to the war with Iran, or new U.S. tariffs hitting carmakers already squeezed by Chinese competition, could make the recovery even more fragile.

The political damage is showing in the polls. An ARD DeutschlandTrend survey released on April 1, 2026 found only 15 percent of respondents satisfied with the government and 84 percent dissatisfied. Recent voting-intention polls put the CDU/CSU at 26 percent and the SPD at 12 percent, while Merz’s personal approval fell to 21 percent, down eight points from early March. For Europe’s largest economy, the danger is no longer just poor polling. It is the risk that internal coalition fights will freeze decision-making just when Germany and Europe need steadiness most.