Germany’s struggling economy has been central in the latest election campaign, with critics blaming Chancellor Olaf Scholz’s policies. As voters head to the polls, Friedrich Merz of the Christian Democratic Union (CDU) is the likely next chancellor.
Merz has criticized Scholz’s economic approach, vowing to revive growth through tax cuts, deregulation, and investment incentives. However, analysts remain skeptical about a significant turnaround.
“There is a high risk that Germany will get a refurbished economic model after the elections, but not a brand new model,” said Carsten Brzeski, global head of macro at ING. While the CDU’s proposals favor economic conservatism, they lack clear investment strategies for infrastructure and digitalization.
Germany has faced economic challenges, including GDP contraction, struggles in the auto sector, and a housing crisis. The country’s “debt brake,” which limits public borrowing, adds to the complexity. While Merz is open to some reform, his party largely supports fiscal restraint, making a 2% GDP growth target difficult to achieve.
After the election, the CDU/CSU will likely need a coalition partner, with the Social Democrats or Greens as probable candidates. Analysts warn that economic recovery will be slow, and not all Germans will benefit equally from the proposed policies.
Related Readings:
.
