Germany's CDU shifts fiscal stance under Merz amid budget crisis and pension debates
Germany's CDU has softened its stance on debt and spending under Chancellor Friedrich Merz. The party, now in coalition with the SPD, has moved away from its long-held fiscal conservatism. This shift comes as the government faces a €130 billion budget gap and debates reforms to the pension system.
In 2026, the CDU entered a coalition government with the SPD, marking a change from its previous rigid fiscal policies. Under former leaders like Wolfgang Schäuble, the party resisted debt increases even during economic strain. Now, however, it has accepted higher borrowing and new spending while pushing for tax cuts and economic stimulus.
At a recent party conference, the CDU rejected a motion from its younger members. Their proposals included ending the 'pension at 63' scheme, but the conference voted against the plan. Despite this, Merz indicated that the newly formed pensions commission could still review the rejected ideas.
Merz has also stressed the importance of controlling borrowing. He argued that excessive debt risks destabilising the currency and financial markets. At the same time, he confirmed that the CDU/CSU would not seek additional debt in the current legislative term.
The coalition treaty already includes a commitment to examine the pension system. This suggests that while immediate changes may be limited, further discussions on pensions and fiscal policy remain on the agenda.
The CDU's approach now balances new spending with calls for financial restraint. The pensions commission will explore reforms, including proposals initially dismissed by the party. For now, the government has ruled out further borrowing but continues to navigate economic challenges and internal party divisions.
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