Frederich Merz’s Victory in Germany

March 3rd, 2025

Sophia Amundgaard

On February 23, 2025, The Christian Democratic Union of Germany (CDU) secured victory in the nation’s presidential elections, receiving 28.6% of the vote in Germany’s largest voter turnout since 1990. Yet, with less than a third of the population voting in their favor, tipped chancellor Fredrich Merz confirmed the party’s intent to “form a black-red coalition” with the Social Democratic Party of Germany (SPD), who received 16.4% of the vote in an astonishing 10 point drop since the nations 2021 elections.

Germany’s conservative wave mirrors that of broader European politics in the 21st century, with more than 19 European nations headed by right leaning political parties. The surge stems from an increasing public desire for conservative economic policy. In a 2024 poll of 26,000 citizens across 18 member states, 78% of European respondents reported alignment with far-right democratic ideals.

Yet, as the European Union’s largest and most populous economy, German policy shifts bear a larger burden on the region, specifically as it relates to its economic and diplomatic approaches in 2025.

Germany’s Economic Woes

Among the CDU’s top priorities is the stabilization of its flatlining economy, which contracted by 0.2% in its fourth quarter. Cumulatively, the German economy has grown by a shy 1.6 percent since 2017, ranking dangerously below the EU average of 9.5 percent. In an interview with the German Tabloid, he assured voters “that there will be a real turnaround in economic policy and asylum policy” in the coming months.

A key sector for change includes that of population. In the interests of German hospitalities, Merz will need to focus on bracing the nation’s aging population crisis, wherein 22.3% of the current German population is aged 65 and older. By 2030, analysts indicate a GDP decline of around 0.5% by 2030 due to the aging workforce alone.

Proposed solutions include the strategization of immigration to fill in gaps in the workforce. Economists estimate that an annual flow of 288,000 net migrant workers could counteract the effects of the population crisis by 2040. Unfortunately, mass immigration is also burdening the German economy with 51% of Germans citing a desire for tighter filtration policies among an ever exacerbated immigration crisis.

Additionally, Merz will need to tackle ongoing investment diminution and an over reliance on exports in order to salvage Germany’s industry. In the past decade, foreign direct investment (FDI) inflow reached an all time low, reflecting a decline of around 25%. primarily due to reduced FDI loans and a decrease in investment from key partners like the US and China.

Merz’s Foreign policy

At the front of German diplomatic priorities in 2025 is establishing a unified response to the Trump Administration’s presence in the region, which threatened the revoking of security guarantees to Europe established in 1945. Asserting that US president Donald trump is increasingly aligning with an authoritarian Russian Federation, Merz went as far as suggesting the replacement of the North At;antic treaty Organization as Europe’s center for security. In a post election debate, Merz pledged to “strengthen Europe as quickly as possible so that… we can really achieve independence from the USA”.

At the head of independence strategies is Merz’s campaign to establish a European nuclear umbrella. Unfortunately, the price tag of such a turnaround is expansive and likely out of reach for the already flailing German economy. The ongoing war in Ukraine has preliminarily triggered European defense spending while exposing sharp vulnerabilities in Europe's defense industrial base and supply chains. In reaction, Germany established a €100 billion special defense fund to finance NATO's 2% of GDP spending target. Yet, this fund runs out in 2027, leaving little room to expand and develop a new sector of defense spending.

Resultantly, analysts warn that Merz’s projected 2% of GDP spending will not be sufficient to support an independent European security order. Raising defense expenditure to the sufficient rate of 3% of GDP, would require Germany to catalyze an additional €70 billion per year until 2028.

Potential floated solutions include easing Germany's constitutionally enshrined debt brake, increasing taxes, reducing social spending, and campaigning for EU-level joint borrowing to fund defense. Shaping the debt brake would require a two-thirds majority in Germany’s federal parliament, The Bundestag and increased cooperation from leftist parties traditionally opposed to military expansion. While Green Party leader Robert Habeck had indicated willingness to talk in the previous Bundestag, Merz has so far resisted wide debt brake reform as a solution to his defense woes.

As Merz takes on Germany's top job, it becomes apparent that, as outlined in Volker Resing‘s recent biography, “Friedrich Merz is perhaps the most international chancellor Germany has had since [WW2]” who is likely to vastly mold European politics as he enters his term.