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Friedrich Merz is to take office as Germany’s chancellor, fulfilling a life-long ambition at a time of economic and geopolitical upheaval for Europe’s largest democracy.
The 69-year-old Christian Democrat, who won elections in February and has teamed up with the Social Democrats to form a majority government, will become postwar Germany’s 10th chancellor after a vote in the Bundestag on Tuesday.
The election ends six months of government near-paralysis following collapse of departing chancellor Olaf Scholz’s coalition in November, which has left the Eurozone’s largest economy without a budget and hindered its ability to respond to the threat of US trade tariffs and US President Donald Trump’s rushed attempts to settle the fate of Ukraine with Russia.
“We live in times of profound change, deep upheaval and great uncertainty,” Merz said on Monday when formally signing the coalition agreement with the SPD. “And that is why we know that it is our historic obligation to lead this coalition to success.”
Merz, who returned to politics in 2018 after a decade in the private sector, will have to tackle external and internal challenges testing the democratic and economic foundations on which Germany rebuilt after its defeat in the second world war.
Long a fervent believer in the transatlantic relationship, the former adviser at US asset management group BlackRock is facing an unreliable — and at times adversarial — Trump administration that seeks to reduce its protection of Europe, the bedrock of Germany’s postwar security.
The country’s export-oriented economy, which has long thrived on globalisation, has stagnated in the past three years on higher energy prices and fierce Chinese competition. German GDP could contract this year if Trump forges ahead with blanket tariffs on EU goods, the Munich-based Ifo Institute has warned.
“He is the chancellor who has to deal with the end of the west,” said Andreas Busch, professor of political sciences at Göttingen university. “It’s not something he had expected, nor wanted. But now the Europeans know that they can’t rely on the US and that is a sea change.”
Politically at home, Merz has depicted his “black-red” coalition with the SPD as the mainstream parties’ last-ditch attempt to stop the rise of Alternative for Germany. The far-right party, which finished second in the February elections with more than a fifth of the votes and has received the endorsement of Elon Musk and US vice-president JD Vance, was last week designated by the country’s domestic intelligence agency as “extremist”.
The move, which gives the intelligence agency the right to monitor the AfD and its members more closely, has revived a debate over whether to use a constitutional provision to ban the party.
Analysts and economists said Merz had not waited for his anointment as chancellor to take decisive steps to address the multipronged threats.
In the weeks following his party’s victory, he made a U-turn by striking a deal with the SPD and the Greens to loosen the country’s constitutional borrowing limit to boost defence spending. He managed to get the outgoing parliament to adopt the constitutional amendment, putting the country on a path to inject up to €1tn into its armed forces and creaking infrastructure in the next decade.
“Merz has made his plans in full view of the challenges ahead,” Busch said.
Many foreign policy analysts see a Chancellor Merz as the signal that a more assertive Germany is about to return to the European and global stage, after a phase of indecisiveness under Scholz’s coalition with the Greens and the liberal FDP.
“The government must finally take its foot off the brakes,” Armin Steinbach, professor at Paris-based business school HEC, said. “It’s not only about money, not only about investing the massive new debt-financed fund, it is about creating an overall stimulating business environment.”
Analysts saluted Merz’s decision to keep the foreign ministry in CDU hands in order to ensure a more coherent foreign policy. They have also welcomed his plan to create a National Security Council within the chancellery to better co-ordinate security and foreign policies.
“After years of internal bickering and political navel-gazing under the previous government, what’s needed now is German leadership that doesn’t just observe European policy, but helps shape it,” said Jana Puglierin, senior fellow at the European Council on Foreign Relations.
