Friedrich Merz called Germany’s economy critical and warned that 2026 will be very difficult, according to a letter to coalition partners published by Spiegel. The chancellor said productivity is too low and bureaucratic, and tax burdens are excessively high. He tasked the government with creating more favorable conditions for economic development and ensuring growth and job creation.
Merz acknowledged certain achievements by the current administration, including adjustments to migration policy, but said the broader economic context remains adverse. Germany has experienced three consecutive years of stagnation, and GDP fell by 0.2% in 2024, marking the second straight annual decline. The last time the country faced such a prolonged contraction was in 2002–2003. Merz attributed the downturn in part to high energy prices following the halt of gas supplies from Russia.
Considering foreign policy, the chancellor identified ensuring freedom and peace in Europe as the main priority and said Germany is ready to participate in efforts to negotiate a peace settlement for Ukraine. Economy Minister Katerina Reiche warned citizens that maintaining the social‑welfare model may require later retirement or longer working lives. Merz said addressing the country’s challenges will demand decisiveness and confidence.