Europe
Merz begins coalition talks with SPD after German election victory

CDU leader Friedrich Merz, who won the German federal elections, announced on Monday that coalition talks with the Social Democrats (SPD) had begun immediately.
Merz’s Christian Democrats won the elections by a large margin but now have to find a coalition partner.
As expected, the party’s leading candidate quickly turned to the SPD, the party of incumbent Chancellor Olaf Scholz, as his preferred partner.
“We will hold talks [with the SPD] in the next few days,” Merz told reporters at the CDU headquarters in Berlin on Monday, listing foreign and security policy, managing migration, and strengthening German industry as priorities.
On the same day, Merz will also meet with SPD co-leader Lars Klingbeil, he said, adding that he would also speak with Scholz to coordinate the transition.
Klingbeil, who some see as the new leader of the party after Scholz announced his imminent departure, played it down on Monday, saying it was not certain that the SPD would join a coalition but added that it was “ready to hold talks.”
The share of seats for the center-left and center-right parties fell by a third compared to the last election in 2021. The coalition of the Greens and the CDU failed to secure a majority, while the liberal Free Democrats (FDP) failed to re-enter parliament.
The CDU could have had a majority with the right-wing Alternative for Germany (AfD), but Merz once again rejected formal co-operation on Sunday.
According to the Munich-based Ifo Institute, reaching NATO’s spending target of just 2% would require 95 billion euros annually from 2028 onwards, almost double the current defense budget. A possible 3% target would require 140 billion euros.
To change the constitution, however, a two-thirds majority in the German parliament is required, which the center parties CDU/CSU, SPD, and Greens lack, making Die Linke (Left Party) and AfD the key parties.
The Greens have proposed to call an emergency session of the Bundestag within the next 30 days, while parliament is still officially in session under its previous composition, in order to allow new borrowing and defense investments. Both Merz and Scholz have signaled that they are open to this approach.
One option would be to agree to reform the “debt brake,” a constitutional limit on the budget deficit, in order to increase the fiscal leeway, including for defense.
Introduced in 2009, the debt brake limits structural public deficits to 0.35% of GDP but has recently come under criticism for hindering investment in infrastructure and defense.
Alternatively, the government could set up a special extra-budgetary fund outside the limits of the debt brake, which could be approved by a two-thirds majority. Such a special fund of 100 billion euros was created after the war in Ukraine, but it will be exhausted by 2027.
The CDU officially wants to keep the debt limit, but Merz signaled during the campaign that he is open to reform.
The SPD is in favor of reform and has previously argued that higher defense spending should not come at the expense of pensioners, the welfare state, or other public investments.
Markus Soeder, leader of the CDU’s Bavarian sister party, the Christian Social Union (CSU), echoed these views on Monday, arguing that it would not be possible to organize defense by “cutting everything” and causing “social tensions.”
Merz may also opt for tough negotiations with the Left Party in the new parliament. The Left Party leaves the door open to jointly reforming the debt brake but opposes higher defense spending.
But given the urgency of the situation and the squeeze on the center, the old rules seem to be changing rapidly.
Merz said his priority was to end the crisis situation in Germany and restore confidence after a difficult three-year period.
“Some of you will share the view that this period may be one of the last chances to achieve this,” he told reporters.