Merz’s steep throwing shadow over hope to restart the German battle economy

Frankfurt, Germany – Friedrich Merz is unprecedented Failure to win selections as German chancellores in the first round Voting in parliament – Although he won the second – raised doubt in his new government’s ability to carry out plans to push the largest European economy from stagnation.

Tuesday stumbled at the beginning of the new coalition government between his Union of Block and Social Democrats added the uncertainty about the future of the economy that did not see significant growth from before the frame pandemic in Covid.

Above all, Merz is expected to end up over spending and budgets that have been masculine in the Predecesera Olaf Scholz’s coalition that collapsed in November. His 23. February Election winner and coalition contract It seemed to provide security for his government to complete political paralysis and dealing with challenges, including lagging in investments in projects of pro-growth, suffocation of bureaucracy and lack of qualified labor.

However, the first round flop in parliament asked questions about how to be a solid Merzo majority and can undergo growth reforms after two years of production reduction. The outgoing government predicted Zero growth for this year.

“Failed to vote and the fact that she came out of the blue, but significantly weakened Merz,” said Franziska Palmas, the higher Europe economist at the capital economy.

“His promise that now will be more efficient and a government without conflict … it looks much less credible.

Merzo coalition has 328 members in the new parliament. The fact that he received only 310 votes on the first secret ballot – when he needs a majority of 316 out of the 630 votes – she led to speculation that some fiscal conservative legislators resistant to their post-election decision on dismissal Germany Constitutional border on deficit consumption and established 500 billion euros of the infrastructure consumption fund such as bridges, schools and railways.

These measures were forwarded In the outgoing parliament.

Merz won the 325 vote choices about another attempt, but significant damage was made. He leads the function “with two black eyes and shivering knees,” said Andrea Roemmele, a professor of communication and policies in Berlin Hertie school.

I hope that the government will quickly push with new investments and reforms, “said Carsten Macro, the Global Head of the Macro in the Bank, show that not everyone understood the feeling of urgency and the need to have the urgency and need to have a functioning government. “

For years, long limited consumption on infrastructure is limited and in the end is blamed for slowing out growth. On top of that, China went from the lucrative export market for Germany’s competitor in German specialties such as cars and industrial machines. They are comprehensive processes of licenses to slow new business projects, while the loss of cheap natural gas due to invasion in Ukraine raised energy costs for companies.

While the vote was “bad surprise”, some difficult decisions on consumption and debt restrictions were already taken care of in the outgoing parliament, Holger Schmieding, the main economist in Barinberg. “An additional fiscal space exists … Today’s anxiety is unlikely to be affected in the way the additional money for defense and infrastructure is assigned in great way.”

Schmieding noted that most votes in parliament is not a secret ballot, which could prevent some of the members of the coalition that has crowded Merz from voting against law in parliament.

The decision to establish an infrastructure fund outside the debt border has raised hope for several government spending and exit from stagnation. And the hopes were muffled on 2. April when US president Donald Trump has announced that the landscapes of new tariffs At almost all US trade partners, including 20% ​​tariff for goods from the European Union.

It immediately added to the heads for the German economy of exports, in the middle of uncertainty of whether EU officials can negotiate a lower tariff rate during the 90-day breaking institute before the tariffs enter into force.