Friedrich Merz, Germany’s next chancellor, faces a difficult path. He has always supported strict financial policies. However, he surprised his own party by agreeing to a massive borrowing deal in early coalition talks with the Social Democrats (SPD).

A Major Policy Shift

This agreement unlocks billions for Germany’s military, infrastructure, and green energy. As a result, it marks a significant change in policy. Moreover, it gives the centre-left SPD an early victory in the negotiations.

Conservatives Question Merz’s Leadership

Merz’s decision has already weakened his position within his party. Consequently, many conservatives feel frustrated. Johannes Winkel, head of the CDU’s youth wing, criticized the move. “This is a clear defeat for the conservatives, right at the start of the [coalition] negotiations,” he said. Furthermore, he questioned what Merz gained in return for this financial concession. This backlash creates an even bigger challenge for Merz. Previously, he had promised to shift the CDU toward more conservative values after Angela Merkel’s centrist leadership. However, by working closely with the SPD and the Greens, he now risks being seen as too pragmatic rather than a strong conservative leader. Meanwhile, the far-right was quick to attack him. AfD co-leader Tino Chrupalla mocked Merz, saying, “What do you actually stand for, Mr Merz? You’ve got the mRNA of the SPD in your veins by now.”

Disputes Over Migration and Welfare

At the heart of the debate are two major issues: migration and welfare. Merz campaigned on strict immigration policies. Specifically, he promised tighter border controls and limits on asylum seekers. In addition, he called for welfare reforms, arguing that Germany’s spending was too high. However, the SPD strongly opposes these ideas. Since they secured the borrowing deal, they see no reason to compromise. SPD negotiators have made their stance clear. “Anyone who says state modernisation but actually means dismantling employee rights is firstly making a mistake and secondly has the Social Democrats very clearly against him,” said SPD negotiator Lars Klingbeil.

A Controversial Citizenship Proposal

One of the most heated debates involves German citizenship. The CDU proposed stripping citizenship from dual nationals convicted of extremist or antisemitic acts. Immediately, the SPD rejected the idea. Youth leader Philipp Türmer called it an “absolute deal-breaker.” Moreover, SPD lawmakers warned it could alienate immigrant communities and violate European laws. SPD lawmaker Lars Castellucci dismissed the CDU’s expectations. “This idea that the SPD should now grant the conservatives a blank cheque just because of the borrowing deal– that’s not how this works,” he said.

Merz Faces a Tough Position

Now, Merz is stuck in a difficult situation. Since he has ruled out working with the far-right AfD, he lacks the numbers to form a center-right coalition. As a result, he has no choice but to negotiate with the SPD. The Social Democrats understand this and are using it to their advantage. Consequently, coalition talks are becoming more difficult than expected. Initially, many hoped to reach an agreement by Easter. However, Merz now sounds more cautious. “Thoroughness comes before speed,” he recently said.