Merz Advocates for Economic Renewal with Clear Policies

Tue 4th Feb, 2025

Friedrich Merz, the Union's candidate for chancellor, has utilized his party conference speech to propose a renewal of the Social Market Economy, addressing significant concerns shared by the public about Germany's economic performance. Following two years of economic contraction, surveys indicate widespread anxiety regarding the country's economic viability, exacerbated by politically induced disadvantages for businesses.

Merz's address highlighted the need for the state to reassess its role, particularly in economic affairs. Unlike his predecessor in the speech, Merz emphasized that the Union seeks a mandate on February 23 to pursue two critical policies: enhanced border protection regarding migration and a more limited governmental role in economic regulation to foster greater economic freedom for citizens.

He pointed out that the current government's approach, led by the SPD and Greens, often overlooks the fundamental principles of the German economic system, where the state should not act as a business entity but rather protect ownership and professional freedoms that underpin economic motivation. Merz criticized the excessive faith in state intervention promoted by the SPD and Greens, a sentiment that has been partially reinforced by the large coalitions during Angela Merkel's chancellorship.

Looking back on the decisions made during Merkel's tenure, Merz expressed a commitment to rectify past errors in both migration and economic policies. He condemned the previous nuclear phase-out as a decision driven by transient trends and pledged that the Union would resist being influenced by popular sentiments that could lead to detrimental outcomes.

As the election approaches, Merz has prepared the public for potential challenges accompanying the anticipated policy changes, emphasizing that the journey back to economic competitiveness will be demanding. He called for a proactive approach to work and efficiency, assuring that his administration would prioritize decisions conducive to enhancing competitiveness and would tackle bureaucratic excesses within the European framework as an ongoing commitment.

Merz proposed a gradual tax reduction plan, decreasing corporate taxes from 30% to 25% over four years, while explicitly ruling out increases in inheritance taxes or higher income tax rates for high earners. He advocated for a more efficient government capable of fulfilling its responsibilities without exceeding the current debt limits or imposing additional financial burdens on individuals.

He also noted that any new social initiatives would require existing support systems to be restructured, contingent on the economy's recovery. The ongoing discussions about social reforms reflect a necessary adjustment to ensure that the welfare state does not undermine work incentives.

Amidst these developments, the SPD and Greens continue to promote extensive taxpayer-funded redistribution policies, which Merz argues are misguided. His proposal to reshape the citizen's income into a more traditional safety net indicates a willingness to engage with social reform, despite existing gaps in the party's program.

For voters evaluating the available options, Merz's platform presents a significant market-oriented perspective that underscores the need for a substantial mandate to enact these pivotal changes.


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