No more Stoßluften!
Merz spent the spring trying to give Germany's economy a breath of fresh air. Now his coalition must survive a politically explosive autumn.
Dear Reader,
The window is now shut.
Friedrich Merz’s government spoke at the beginning of the year about a Reformfenster – a window of opportunity that would allow the government to pass its long-heralded economic reforms — that would close this week.
Why was the timeline so tight? Because the Bundestag went into recess on Friday, meaning that no new laws can be passed until the second week of September. By that stage, events may already have overtaken the federal government.
On Sunday, September 6th — the day before Bundestag MPs return from their holidays — state elections will be held in Saxony-Anhalt. The result of that election could make further compromise difficult, if not impossible.
If current polling is to be believed, the AfD is on course for a comprehensive victory. The populists are expected to win 40 per cent or more. The CDU, which has governed the eastern state since 2002, is lagging well behind on just 23 per cent. That is nothing compared with the prospects for the Social Democrats. They are hovering perilously close to the five per cent threshold required to enter the state parliament.
Because four parties are polling around the five per cent threshold, the final distribution of seats is highly uncertain. However, there is a plausible scenario in which the AfD ends up with an outright majority. The repercussions of such a development cannot be overstated.
It would mark the first time since the Second World War that a party to the right of the CDU has held any meaningful political power. The sense of existential threat would be palpable. Left-wing activists have already announced that they will try to prevent “the first fascist government since 1945”. Given the recent history of such protests, street blockades aimed at preventing the AfD from entering the parliament building are one possibility.
Since the police would inevitably have to respond to such protests with water cannon, the situation could quickly spiral out of control. We have already seen how relatively small events can trigger nationwide anti-AfD protests. A similar dynamic could unfold here.
Cabinet ministers would react by saying that now is the time for the centre to hold its nerve and keep building on the work that was carried out before the summer break. But the mood inside both parties is likely to be mutinous. SPD members will blame their leaders for acquiescing to Merz’s pet projects, such as requiring a sick note from the first day of illness. The CDU would complain that too much political space has opened up for the AfD on its right flank. The SPD would be tempted to endorse the anti-AfD protests; the CDU, aware that many voters see the protests as subverting democracy, would hesitate.
The result in Saxony-Anhalt could set off a chain of events that reverberates through Berlin and Mecklenburg-Western Pomerania, which hold elections a fortnight later — and where fringe parties on both the hard right and the hard left are leading in the polls.
For the government, that is the nightmare scenario.
The best-case scenario is that the CDU wins enough votes in Saxony-Anhalt to remain in power by relying on informal support from the hard-left Die Linke, and that neither of the two main parties completely embarrasses itself in the subsequent elections in Berlin (where the CDU mayor has just resigned) and Mecklenburg-Western Pomerania. Even that situation is hardly ideal. The CDU has sworn never to work with the AfD, but it has also sworn never to work with Die Linke. For many party members, the left-wing party is far more ideologically distant than the AfD.
In this scenario, the discontent inside both the CDU and SPD would be plain for all to see. There would be inevitable calls for “CDU pur” (more conservative policies) or for the SPD to make its voice heard more clearly in the Chancellery. Names would be floated as possible successors to the current party leaders.
Which is why it was so important for Merz to announce his reform package before the summer recess. Now, when rumours of a coup emerge, his supporters can counter with the beloved political idiom: “Man wechselt nicht mitten im Rennen das Pferd.” The chancellor has started the reform agenda — now the CDU has to give him time to see it through.
Will that be enough to quell a rebellion? For some backbenchers, the argument of “come on, I’m just getting going” may sound somewhat thin. According to Merz’s original timeline, the economy was already supposed to be purring along by this stage. This autumn’s elections should have confirmed that the tide of public opinion was turning back to the political centre ground.
Instead, opening almost any German newspaper remains a gloomier experience than doom-scrolling through social media. The government’s economic advisory council recently cut its growth forecast to 0.5 per cent and predicted that inflation will rise to three per cent; unemployment is higher than it was at the peak of the pandemic; Volkswagen has confirmed that it wants to cut 50,000 jobs; consumer confidence shows no sign of improving; the Mittelstand has scaled back its investment plans to a level not seen in the past 30 years.
What’s more, Merz’s reform package, announced in early July, has received a lukewarm reception from the companies it was supposed to help. “No game changer” and “too complex” was how the chief executive of a specialist glue manufacturer described it to Der Spiegel, adding that her company would focus its future investments abroad.
Of the reforms that the Merz government agreed upon, only one — the health insurance bill — passed the Bundestag before the summer break. The rest will be debated after MPs return from the summer holidays. The pension reform, for instance, contains more than 30 recommendations, some of which please the SPD and others the CDU. Merz and his minister have agreed that all 33 recommendations will pass into law.
But will backbenchers looking over their shoulders at the AfD and Die Linke agree? One thing is clear: if one side starts to pick away at aspects of the reform agenda, the other side will follow. Very quickly, the whole thing could unravel.
The window is now shut and — Germans grow famously nervous when windows stay closed for too long.
Did Merz use the period before the summer recess for an effective round of Stoßlüften, ensuring that his coalition has enough oxygen for the colder months ahead? Or will members of his coalition start to panic and decide that the only way to get some fresh air is to head for the exit?