The recent German federal elections have set the stage for a transformative shift in Germany’s political landscape, with Friedrich Merz and the Christian Democratic Union of Germany/Christian Social Union (CDU/CSU) emerging as the winners of the election. This change is not just significant for Germany, but will have implications for wider European politics, EU policy, and international relations.
Election Results, Coalition Prospects, and Policy Directions
On 23rd February, the CDU/CSU secured 28.5% of the vote, positioning Merz as Germany’s next Chancellor. The populist right-wing Alternative for Germany (AfD), despite making historic gains, remains excluded from coalition talks due to major policy differences and will take the place as official opposition in the Bundestag. Meanwhile, the former governing party, the Social Democratic Party of Germany (SPD), suffered dramatic losses winning just 16.4% of the popular vote, whilst the far-left Die Linke exceeded expectations, securing 8.8%. The prospect of a CDU/CSU-SPD coalition appears to be the only viable coalition, though significant policy differences—particularly on migration—could present challenges.
EU Politics and Policy: Shifting the Balance of Power
The primary focus of the CDU/CSU is to strengthen Europe and reduce dependence on the U.S., particularly in defense matters. In response to NATO’s push for increased defense spending, the party may support the European Commission’s plans to borrow money on behalf of EU member states to meet NATO’s targets. This could appeal to countries like France and Italy, though it might face resistance from more fiscally conservative nations such as Austria and the Netherlands.
On trade policy, Germany is expected to forge stronger ties with other EU countries, particularly France, while adopting a firmer stance on Russia and China. Both the CDU/CSU and SPD support the Mercosur trade deal, signaling a united effort within the EU to strengthen global trade relations.
In energy policy, the CDU/CSU is likely to advocate for a more industry-friendly approach. While supportive of renewable energy, there is resistance to some of the EU‘s green energy targets. Additionally, a potential openness to nuclear energy could challenge Germany’s long-standing opposition to it. Efforts to repeal the Building Energy Law may also reflect skepticism toward stricter green policies.
Germany aims to lead in emerging technologies such as AI, quantum computing, and space exploration, with plans to increase R&D spending to 3.5% of GDP by 2030. On healthcare, the CDU/CSU supports a mixed system combining both public and private insurance, whereas the SPD prefers a more publicly focused approach.
The party’s leadership could shift the dynamics within the European Parliament, likely strengthening the European People’s Party (EPP) and enhancing its influence. This shift would play a significant role in shaping EU policies, particularly concerning migration and economic policies. The CDU/CSU’s support for tighter asylum policies could create friction with EU law, but a coalition with the SPD, a pro-EU party, may help navigate these challenges. Still, differing positions on immigration could well lead to tensions within the governing coalition.
On EU foreign policy, a more assertive approach toward Russia and China is expected, with a push for greater unity within the EU. However, internal disagreements over other policies could threaten Germany’s influence on EU decision-making.
The Road Ahead for Germany and the EU
With Merz at the helm, Germany will now seek to more aggressively protect its economic interests, particularly in banking and industrial policy. Merz’s position on cross-border mergers, such as UniCredito’s bid for Commerzbank, will be crucial in shaping Germany’s role within the EU. His push for state-funded projects across borders, particularly in hydrogen and cloud infrastructure, could lead to a new wave of EU industrial policy.
However, challenges remain. Merz will need to balance competing priorities, such as cybersecurity concerns, with economic growth. His potential restrictions on Chinese tech suppliers and his stance on data protection will further define Germany’s approach to EU digital policy.
In summary, the Merz-led CDU/CSU government is poised to shift Germany’s role within the EU significantly. A strong emphasis on strengthening Europe’s independence, particularly in defence and foreign policy, alongside efforts to bolster Germany’s economic competitiveness, will influence EU policy for years to come.