Political Strategies for Combating Inflation Ahead of the 2025 Bundestag Elections

The impact of inflation is being felt across various sectors in Germany, prompting political parties to outline their strategies in the lead-up to the 2025 Bundestag elections. The rising costs of living, particularly in housing and food, have created distinct challenges for the younger demographic aged 18 to 29, as highlighted by the RND election compass.

With a focus on affordable housing, the parties are proposing a range of solutions aimed at mitigating the financial strain on young people. The Christian Democratic Union (CDU) emphasizes the necessity of increasing residential construction, aiming to simplify regulations that currently hinder building projects. They propose reducing the electricity tax, which currently stands at EUR20.50 per MWh, to alleviate some of the financial burden on households.

The CDU also suggests that individuals inheriting or receiving properties should be able to finance energy-efficient renovations through tax deductions. They aim for policies that would adjust income tax thresholds in line with inflation to prevent increased tax burdens during times of rising wages.

The Social Democratic Party (SPD) has pledged to extend the rent price cap indefinitely and limit terminations for personal use to immediate family members. In regions experiencing significant housing shortages, they propose a stricter cap on rent increases, limiting them to 6% over three years instead of the usual 10%. Additionally, the SPD plans to reform property tax allocation to ease the financial pressure on students and trainees.

In an effort to tackle food prices, the SPD intends to permanently reduce the value-added tax on food from 7% to 5%. They also propose reforms to ensure greater fairness in the real estate market, allowing individuals who sell properties they have not personally occupied for over ten years to do so without incurring taxes on the sale.

The Alternative for Germany (AfD) aims to facilitate residential construction by abolishing the heating law and reducing building costs to make home ownership more accessible. The party advocates for focusing on domestic production and self-sufficiency to stabilize food prices.

The Greens propose a comprehensive plan to increase affordable housing availability, including capping rent increases, supporting social housing initiatives, and abolishing the transferability of property taxes to tenants. They seek to enhance transparency in utility bills, allowing tenants to better compare their costs and promoting renewable energy sources to reduce expenses.

The Left party is advocating for a nationwide rent cap and plans to suspend rent increases for six years as an immediate measure. They propose social tiered heating and electricity prices based on household income, aiming to ensure that lower-income households receive significant subsidies for energy costs.

The Free Democratic Party (FDP) opposes the extension of the rent price cap and plans to optimize tax deductions for builders to stimulate housing construction. Their proposals include eliminating the property transfer tax on the first EUR500,000 of a home purchase, making it easier for individuals to enter the housing market.

The Alliance for Germany (BSW), led by Sahra Wagenknecht, advocates for a more community-focused housing market, suggesting measures such as interest-free loans for municipal construction firms and a reevaluation of building regulations to lower costs. They propose increased oversight of food prices to ensure transparency in corporate profits.

Lastly, the party Volt emphasizes the need for sustainable and socially responsible housing development, advocating for reduced electricity taxes and lower VAT on sustainably produced food.

As the elections approach, the political landscape is increasingly focused on how each party plans to address the pressing issues of inflation and the cost of living, particularly for younger voters who feel the impact most acutely.