Germany's government closes its ranks at time of crisis

Only four months after the government took office, satisfaction with the ruling coalition of the center-right Christian Democrats and Christian Social Union (CDU/CSU) and center-left Social Democrats (SPD) has fallen to a record low: In a monthly opinion poll, only 22% of eligible voters said they were satisfied with Chancellor Friedrich Merz's government.

The Cabinet ministers are now meeting for a closed-door session at Villa Borsig in Berlin to talk about several hot potato issues.

Strained national budget

When it comes to fiscal policy, there are a whole host of contentious issues, beginning with the national budget. Merz alienated many of his voters when he quickly relaxed the "debt brake" that limited fresh borrowing to 0.35% of gross domestic product (GDP), which he had vowed to uphold throughout his election campaign.

Now, enormous credit-financed sums are available for investment in infrastructure and defense. Yet this came at the expense of Merz's credibility with his voters, and it means that the government faces rising interest payments.

Consequently, the CDU and CSU are pushing for austerity, while the SPD is primarily focused on increasing revenue i.e., raising taxes.

Taxes up or down?

Which brings us to a classic point of contention between the CDU/CSU and the Social Democrats: The SPD is in favor of higher taxation on large wealth, inheritances and income to generate more revenue for the state and for social justice reasons reasons.

The CDU and CSU oppose nearly all tax increases, arguing that they are detrimental to the economy.

Some conservative politicians have recently indicated a willingness to make concessions on the inheritance tax. This may signal the possibility of a tradeoff, with the SPD accommodating the CDU/CSU on other issues, such as "citizen's income."

Citizen's income to be renamed

The CDU and CSU are already taking issue with the name of the welfare payments. "Citizen's income" is the term introduced in 2023 under the previous SPD-led federal government for basic income support for jobseekers.

According to the conservative parties, the term resembles "basic income" and suggests that everyone is entitled to state support. They argue that there is too little pressure on the long-term unemployed to accept offered work.

In July 2025, about 5.4 million people in Germany received citizen's income. Of these, around 3.9 million were classified as able to work.

The CDU/CSU points out that almost half of the recipients are foreign citizens, such as Ukrainian war refugees and argues that Germany's welfare system encourages immigration.

The SPD does not believe that there is systematic abuse of the support and rejects severe cuts or the introduction of restrictions.

Both sides agree that organised fraud involving citizen's income, numerous suspected cases of which have been reported by the Federal Employment Agency, should be combated.

Social security under pressure

All parties agree that an ageing population with increasing numbers of retirees must force changes to the pension system. Here, too, the CDU/CSU tends to favor adjustments to the pension system, such as raising the retirement age. Many CDU lawmakers are pushing for more radical pension reforms so that the burden on young people will be less severe in the future.

The SPD tends to favor safeguarding good pensions. Labor minister and SPD co-chair Bärbel Bas argues that most people rely on the statutory pension, which means that they do not have to rely on support from their children to avert old-age poverty.

The CSU has insisted that mothers whose children were born before 1992 should see a slight rise in their pensions, although this will place a €5 billion burden on the budget.

Not only are particularly heated disagreements still expected within the coalition on pensions, but also on health insurance and long-term care, which are under similar demographic pressure.

Doomed to success on curbing immigration

German borders are now being closed, and people are being turned away. CSU interior minister Alexander Dobrindt said this had led to a sharp decline in "illegal immigration."

The SPD has supported a stricter immigration policy, albeit with significant reservations.

The Social Democrats were quick to reject an initiative by Bavarian State Premier Markus Söder to cut welfare payments to all refugees from Ukraine and pay them only the minimum amount of benefits for asylum applicants.

There is a lot of pressure to overcome the differences between the CDU/CSU and the SPD on immigration in the face of the mounting strength of the far-right anti-immigration party Alternative for Germany.

Conscription or voluntary service?

The coalition partners want to strengthen the German armed forces and inject much more money into the military.

Their views diverge when it comes to conscription. This summer, the Cabinet introduced a draft bill for a new military service. The draft introduces a military registration system for young men, which will initially be a voluntary service.

"If, despite all efforts, the demand cannot be met by volunteers, we are prepared," SPD defense minister Boris Pistorius said recently. "Compulsory conscription will then have to happen." This view is shared by numerous politicians from the CDU and CSU, who want to see conscription if not enough volunteers can be found.

Pistorius, however, is at odds with his own party, which passed a resolution against conscription at its federal party conference in June. This is another issue that is likely to be hotly contested.

Mistrust following failed election of a judge

Three new judges, two women and one man, have now been elected to the Federal Constitutional Court by the Bundestag, Germany's lower house of parliament, with the necessary two-thirds majority, but only on the second attempt.

The election failed at the last minute in July, right before the summer recess, after reservations were voiced in the CDU/CSU parliamentary group about the SPD's nominee, Frauke Brosius-Gersdorf.

This led to mistrust and doubts over whether the coalition was able to work together.

This harked back to events in May, when Friedrich Merz needed an unprecedented second round of voting in the Bundestag to become chancellor. This was because of dissenters within the ruling parties' own ranks in the first round of voting, which created a negative atmosphere from the outset.

On Tuesday and Wednesday, the government partners will undergo what has been billed as a team-building exercise at Villa Borsig in Berlin. The retreat, being held in the villa of former industrialist Ernst von Borsig, symbolises the government's willingness to prioritise economic competitiveness and state modernisation.