Merz's spending splurge risks blowback among German conservatives

By Maria Martinez

BERLIN (Reuters) - A bold move by Germany’s prime minister-in-waiting Friedrich Merz to ease longstanding caps on government spending has won praise internationally but signs are emerging of a domestic political blowback.

His conservative Christian Democratic Union (CDU) and their Bavarian allies, the Christian Social Union (CSU), have long seen themselves as guardians of fiscal rigour and have been stunned by Merz's surprise readiness to countenance higher debt.

An INSA poll published on Sunday showed 73% of all voters and 44% of CDU/CSU supporters felt deceived. Support for the group fell one point to 27% while the far-right Alternative for Germany (AfD) gained one to 23%.

That left the margin between the two parties at just four points, half the gap one month ago when the election took place.

"The CDU/CSU has failed to deliver on its pre-election promises with the debt package," INSA head Hermann Binkert told Bild. "Some disappointed voters are turning to the AfD."

Merz announced his dramatic shift on spending - agreed with likely future coalition partners the Social Democrats - only nine days after winning the February 23 election, following a campaign in which he had promised not to open the spending tap.

Parliament approved the plans last week, jettisoning decades of fiscal conservatism in hopes of reviving economic growth and scaling up military spending for a new era of European collective defence as the U.S. pulls back from Europe.

Yet, CDU voters are deeply torn over the move and its justification.

"If America no longer helps us, we have to defend ourselves," Juergen Feddersen, born in 1944 towards the end of World War Two, told Reuters.

"We have to because Russia will not calm down. I don't trust (Russian President Vladimir) Putin," said Feddersen, a CDU voter for 50 years and previously a staunch supporter of the debt brake, instituted by former CDU chancellor Angela Merkel to formally restrain government borrowing.

There is broad public approval of higher spending on the armed forces and defence, arising from the changed threat situation for Germany and Europe, Andrea Wolf of pollster Forschungsgruppe Wahlen told Reuters.

But voter reaction to Merz's decision will surface in the polls in the coming weeks, Wolf said. "It is quite likely that this will cost the (CDU/CSU) and Friedrich Merz support."

Already, younger CDU supporters fear the onus for funding the new spending spike will land on them, already a generation struggling to get on the housing ladder and fearing future pension and welfare entitlements could be at risk.

"I am worried that it will be the younger generation that will be hit with the additional debt, because it will have to be reduced at some point," said Janik Wiemann, 26, a social services worker in the northwestern town of Lemgo.

Before the election, Merz said today's debts are tomorrow's tax increases, said Wiemann, who also heads the youth section of the CDU's welfare policy wing, the CDA.

A separate poll by Forsa published last week also showed the gap between the CDU and AfD narrowing to only four points.

"If citizens' expectations are once again disappointed by the new federal government, it cannot be ruled out that the AfD will become the strongest party in the next general election, not only in the east of the country, but in the whole of Germany," said Manfred Guellner, head of pollster Forsa.

(Reporting by Maria Martinez; editing by Mark John and Mark Heinrich)