Merz Calls for Major Effort to Boost Germany's Competitiveness

In his inaugural government address, Chancellor Friedrich Merz of the CDU emphasized the need for a significant collective effort to enhance Germany's competitiveness. This call to action comes after a challenging start to his tenure, which included a difficult first round in the chancellor election.

During a recent CDU economic conference, Merz outlined the main themes of his upcoming speech, indicating that the nation must increase both productivity and efficiency. He asserted that the pursuit of a four-day workweek and an emphasis on work-life balance would not suffice to maintain the country's prosperity. He highlighted the importance of adhering to the agreed-upon 40-hour workweek as stipulated in the coalition agreement with the SPD, urging swift implementation.

Merz identified the reduction of energy costs and the streamlining of bureaucratic processes as urgent priorities for his administration. He characterized the lack of extensive government experience among himself and his cabinet of 17 ministers as a unique opportunity to effect substantial change in the country. Notably, Defense Minister Boris Pistorius is the only member of the cabinet with prior government experience.

Having been elected chancellor on May 6, Merz is set to unveil his government's program at 1 PM today, aligning closely with the coalition agreement while potentially introducing new initiatives. Over the following days, all ministers will present their plans for their respective departments.

The new government faces four primary challenges during its initial phase:

In light of current global tensions, Merz has indicated that a significant portion of his early efforts will focus on foreign affairs. He aims to restore Germany's leadership role within Europe. Just two days into his administration, he engaged in a phone conversation with U.S. President Donald Trump, reporting a surprisingly positive rapport. Merz has also been instrumental in initiating diplomatic efforts aimed at resolving the ongoing conflict in Ukraine.

Interior Minister Alexander Dobrindt (CSU) has begun to implement a campaign promise by directing the federal police to deny entry at land borders to certain undocumented migrants seeking asylum in Germany. However, this policy will not apply universally; exceptions will be made for pregnant women and mothers with young children. Other proposed reforms concerning migration and citizenship laws will require legislative changes and are expected to take additional time to finalize.

Finance Minister Lars Klingbeil has prioritized the 2025 budget, aiming to present plans to the cabinet by the end of June, with hopes of discussing them in the Bundestag before the summer recess. Although the government can operate without an approved budget, new initiatives will be difficult to implement without it. Additionally, a legislative proposal for a EUR500 billion fund dedicated to infrastructure investments is in the pipeline, although concerns have been raised regarding compliance with European debt regulations.

The new economic team, led by Minister Katherina Reiche, faces significant challenges, including a trade conflict with the United States, high energy prices, and burdensome regulations impacting businesses. Economic experts predict that Germany's economy may stagnate or contract this year. Reiche has committed to adopting a more pragmatic approach to economic policy, indicating that the focus will shift back to ensuring energy security and affordability, which may have been overlooked in recent years in favor of climate initiatives.