Published by Global Banking & Finance Review®
Posted on May 5, 2025
3 min readLast updated: January 24, 2026
Add as preferred source on GoogleFriedrich Merz, set to become Germany's chancellor, vows economic reform with SPD coalition, focusing on growth and defense amid global tensions.
By Sarah Marsh and Andreas Rinke
BERLIN (Reuters) - German conservative Friedrich Merz vowed on Monday to move swiftly to reform Europe's largest economy, a day before he is due to be sworn into office as chancellor and head of a coalition with the centre-left Social Democrats (SPD).
Merz, whose CDU/CSU conservative bloc won February's elections, and the leaders of the SPD signed off on their coalition treaty mapping out their plans for the next four years.
The two parties aim to revive growth in Germany just as a global trade war sparked by U.S. President Donald Trump's sweeping import tariffs threatens another recession year, as well as to ramp up defence spending amid strains in the transatlantic NATO alliance.
"As of tomorrow, you will have a government that is determined to move Germany forward through reforms and investments," Merz said.
His government's voice would be "heard in Europe and in the world," he said, after the implosion last November of outgoing SPD Chancellor Olaf Scholz's three-way coalition left a political vacuum at the heart of Europe.
SPD co-chief Lars Klingbeil said the incoming government must help shape the new world order, or risk being "shaped by it".
Earlier on Monday the SPD unveiled its cabinet picks, a mix of fresh and well-known faces. The SPD had already said last week Klingbeil, 47, would take on the finance ministry.
Defence Minister Boris Pistorius, 65, is the only minister who will keep his job in the new coalition after the SPD scored its worst ever result in the Feb. 23 national election.
Pistorius, defence minister since January 2023, is popular for his direct style and firm stance on national security. He has said Germany should be ready to face a war by 2029 due to threats from Russia - a bold statement in a country scarred by its own military aggression in the last century.
The SPD also nominated ex-Bundestag president Baerbel Bas, 57, as labour minister, former commissioner for eastern Germany Carsten Schneider, 49, to lead a new ministry for environment and climate protection, and former state secretary for integration Reem Alabali-Radovan, 35, as development minister.
"As a consequence of the poor results in the federal election, we jointly announced a renewal in both personnel and policy direction. With our government team, we as the party leadership are now taking the next step," Klingbeil, co-leader Saskia Esken and General Secretary Matthias Miersch said in a statement.
(Reporting by Sarah Marsh, Andreas Rinke and Markus Wacket, Editing by Friederike Heine, Alexandra Hudson, Peter Graff)
The article discusses Friedrich Merz's plans to reform Germany's economy as he becomes chancellor, leading a coalition with the SPD.
Friedrich Merz is a German conservative politician set to become chancellor, leading a coalition with the SPD to reform the economy.
The coalition aims to revive Germany's economic growth and increase defense spending amid global trade tensions and security concerns.
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