Germany’s Chancellor Friedrich Merz has reaffirmed his commitment to pushing through welfare reforms and rallying support for Europe amid mounting domestic political pressure. Speaking ahead of an investment summit in Berlin, Merz dismissed calls for his resignation following significant setbacks for his Christian Democratic Union (CDU) in recent state elections, including historic losses in eastern Germany.
Since assuming office last May, Merz has sought to stimulate Germany’s sluggish economy by relaxing the country’s debt brake to fund a wide-ranging investment package targeting infrastructure and defense. However, his approval ratings have declined sharply, and his efforts have been hampered by disagreements with his junior coalition partner, the Social Democrats. The CDU’s poor performance in Saxony-Anhalt—where the far-right Alternative for Germany (AfD) is poised to claim the state premiership for the first time since World War II—and a failure to secure any seats in Mecklenburg-Vorpommern’s regional parliament for the first time in eight decades have intensified scrutiny of his leadership.
Despite the electoral blow and the AfD’s rise—polling near 30 percent nationally—Merz vowed to block the far-right party from gaining political influence. He emphasized that his party forms a “firewall” against the AfD, rejecting any cooperation due to fundamental disagreements, especially on issues related to European Union membership, NATO, and support for Ukraine amid Russia’s ongoing invasion. “We will not support any cooperation with the AfD in any state parliament,” Merz stated.
On the reform front, Merz highlighted plans to overhaul Germany’s pension system by introducing a Swedish-style pension fund to replace part of the existing pay-as-you-go scheme, describing it as a potential “game changer.” He acknowledged the complexity of the legislative process but expressed determination to see it through, positioning the reforms as critical to revitalizing the country’s social security framework.
Looking beyond Germany, Merz addressed concerns about the broader European political landscape as several EU member states—including France, Poland, Italy, and Spain—prepare for elections next year. He pointed in particular to the potential election of French far-right leader Marine Le Pen, whose Eurosceptic stance threatens the traditional Franco-German partnership central to the European project. Nonetheless, Merz expressed openness to cooperation if Le Pen were to win, noting common ground on reducing EU bureaucracy but reiterating the importance of a unified Europe.
Merz also underscored the need for a “strong” and “politically independent” European Central Bank (ECB) to maintain price and financial stability amid ongoing capital market challenges, referencing the expected departure of ECB President Christine Lagarde ahead of the French presidential election. He signaled Germany’s preparedness to manage the transition, emphasizing the ECB’s vital role.
On trade, Merz voiced support for measures being developed alongside French President Emmanuel Macron to empower the European Commission with enhanced tools to counteract economic coercion from countries like China and the United States. Citing growing threats to German and European industries, he described a shift away from Berlin’s traditionally free-trade approach toward more robust economic defense mechanisms.
The chancellor reiterated Germany’s commitment to sustaining military and financial assistance to Ukraine, warning that any withdrawal of support could destabilize the continent’s political order. While expressing skepticism about a recent U.S. agreement to lift sanctions on Russian diesel imports to alleviate American energy costs, Merz stressed the complexity of maintaining transatlantic unity in support of Kyiv amid unpredictable political dynamics.
Facing a turbulent political climate at home and an unpredictable international environment, Merz signaled his intent to remain in office and steer through reforms and challenges, seeking to restore confidence in Germany’s economic and political future.