Update on Coalition Talks: Progress in CDU, CSU, and SPD Negotiations

The coalition negotiations between the CDU, CSU, and SPD are approaching a critical juncture, with discussions set to resume on Monday after a brief pause on Sunday. As the negotiators enter the final stretch, numerous unresolved issues remain.

According to Anke Rehlinger, the Minister-President of Saarland and a member of the SPD, this phase of the negotiations is akin to the final moments of a race, where the last reserves of energy must be summoned. Rehlinger is part of a group of key negotiators known as the '19er-Gruppe,' which has been tasked with reviewing the outcomes from 16 working groups. While there have been several areas of agreement, many essential points still require resolution.

On Monday evening, the leading figures will reconvene at the CDU headquarters for further discussions. Prior to this larger meeting, there will be smaller sessions designated as 'problem-solving rounds' to tackle specific issues.

Originally, Friedrich Merz of the CDU, who is poised to become the next Chancellor, aimed to establish a new government by Easter, which is now less than three weeks away. Achieving this timeline would necessitate a consensus within the upcoming week, as the SPD has indicated that its members will need ten days to review any coalition agreement reached with the Union. Both Merz and Lars Klingbeil of the SPD have emphasized, however, that thoroughness is more important than speed, casting doubt on whether the coalition agreement can be finalized by Easter due to significant remaining challenges.

One of the primary sticking points in the negotiations is financial planning. The federal budget for 2025, along with future financial projections, reveals substantial deficits, even with increased budgetary flexibility for defense. The proposed EUR50 billion special fund for infrastructure and climate protection is expected to require additional investments.

Merz has stated that substantial savings will be essential, highlighting the need to focus on the federal budget, immigration issues, and the competitiveness of the economy, which is still reeling from two years of recession. Industry representatives are advocating for significant reforms.

Plans for new multi-billion-euro expenditures are already on the table during these coalition talks. For instance, an expansion of the 'Mütterrente' or mothers' pension has been agreed upon, which the CSU is firmly advocating. Additionally, proposals for significant reductions in electricity prices and an increase in the commuter allowance are under consideration.

Another major financial consideration is the potential reduction of corporate taxes, a topic that remains contentious, alongside discussions about income tax relief--where the SPD favors increasing the top tax rate, while the Union opposes it. Other contentious proposals from working groups include suggestions for free school meals for children in kindergartens and schools, which would cost an estimated EUR11 billion per year, a point of contention for the Union.

Merz has expressed concerns that some working groups seem to operate under the motto 'wishful thinking,' and he has underscored the necessity to rein in these aspirations to more realistic levels.

There are also substantial opportunities for cost savings. A shift in the approach to power line construction from underground cables to overhead lines could lead to savings in the billions. Furthermore, the Union sees a potential reform of the citizen's income as a means to achieve significant budgetary cuts.

Other contentious points in the migration policy include the proposal to allow the rejection of asylum seekers at the borders, which must be coordinated with neighboring European nations. The interpretation of this requirement--whether it means informing neighbors or securing their consent--remains debated between the Union and the SPD.

Further unresolved issues include the potential introduction of a new purchase incentive for electric vehicles, the possible reinstatement of compulsory military service, and how to ensure the stability of pension levels. CDU, CSU, and SPD still face numerous challenges ahead as they strive to reach a consensus.