5 Problems Facing Germany’s Election Winners

The Conservatives must navigate a perfect storm of forming a government, and managing immigration, a troubled economy, and the temptation to increase spending.

Friedrich Merz, leader of Germany's conservative Christian Democratic Union and his party's main candidate for chancellor, addresses supporters after the first exit polls in the German general elections were announced on TV during the electoral evening, in Berlin on Feb. 23, 2025. Ina Fassbender/AFP via Getty Images

Germany’s center-right Christian Democratic Union (CDU) emerged as the winner of the federal election last weekend, but the party faces major issues.

After seeing off the populist party Alternative for Germany (AfD) in an election overshadowed by economic woes and a recent suspected terrorist attack in Munich, the CDU’s challenges are just beginning. It faces choppy political waters, economic woes, and tensions around immigration control, all while AfD looks on as the CDU’s major political adversary. Before all of that, however, the first challenge will be to pull together a government.

1. Creating the Government

Led by Friedrich Merz, the CDU, in a conservative alliance with the Christian Social Union, won the election, capitalizing on widespread discontent over inflation, rising energy costs, and immigration policies to get a combined 28.5 percent of the vote.

In Germany, there is rarely a legislative majority, so parties have to try to govern through a minority government, relying on ad hoc parliamentary coalitions. This is also a trend in Europe in general.

The previous coalition involving the Social Democratic Party (SPD), the pro-business Free Democratic Party, and the Green Party lost ground and collapsed in November  2024.

On Feb. 23, as expected, no party won a majority, but Merz vowed to move quickly to form a coalition government. One potential outcome is a so-called “grand coalition” formed by his conservative bloc and Chancellor Olaf Scholz’s center-left SPD, which got 16.4 percent of the vote. This would give the coalition a slim majority.

But there could potentially be months of difficult negotiations before a coalition emerges. And negotiations could always collapse, leaving Merz with having to form a weaker minority government with more left-wing partners.

2. AfD

AfD, endorsed by Elon Musk and his social media platform X, came in second with 20.8 percent of the vote, its best-ever result. However, Merz has ruled out forming a government with the party, even though this would ensure a stable majority.

The party has courted controversy.

The branch of the party in eastern Germany faces increased surveillance after a German court ruled that AfD Saxony can be designated as a “right extremist” group by authorities.

The regional branches of the AfD in the states of Saxony and Thuringia are considered more right-wing than the main party. AfD’s youth organization Young Alternative Thuringia was classified as a “right-wing extremist” group in March 2024.

AfD leader Alice Weidel has denied that the party is “extremist.”

During an interview with The American Conservative, she said: “Neither I nor my party are right-wing extremists. You must know that in Germany this accusation is a battle cry of the left, which dominates the public discourse.”

AfD campaigned for strict border controls, a reduction in asylum-seekers, and the ditching of net zero climate requirements.

There are questions about whether the CDU under Merz will absorb some of AfD’s messaging, but that may not be possible if Merz has to work with a left-of-center government.

On Feb. 24, Weidel said the next chancellor would be pressured by left-wing parties into borrowing more.

“[Merz] won’t be able to implement anything that he promised,” she said.

“He will compromise with the left to loosen the debt brake, and that’s the opposite of what the country needs. ... The state should function like a company, and when a company is over-indebted, you know what happens.”

3. Debt Brake

Germany is Europe’s largest economy, known for its skilled labor force and high-end exports. But it faces significant hurdles, which have prompted renewed debate over its constitutionally enshrined debt brake.

The debt brake caps the federal government’s structural net borrowing at 0.35 percent of gross domestic product, adjusted for the economic cycle.

About 60 percent of Germans are in favor of keeping the debt brake. The idea of this fiscal responsibility law appeals to the national psyche. The German word for both debt and guilt is the same: “schuld.”

The German economy contracted in 2024 for the second year in a row, the country’s statistics office reported on Feb. 25. This raises the question of how the government will continue spending if the economy is not growing.

Merz has been urged to loosen the debt brake to fund a military upgrade in order to increase defense spending, although such a reform would require two-thirds support in Parliament.

However, the AfD, with its 20.8 percent of the vote, and Die Linke (the Left Party), which won 8.8 percent of the vote, have jointly secured nearly one-third of seats in the new Parliament.

With both AfD and Die Linke opposing military spending arising from the Ukraine–Russia war, the two parties could block aims to loosen tough fiscal rules in the Bundestag. However, the latter does want to ditch the debt brake if the money would be spent on welfare rather than defense.

4. Immigration

In January, Merz vowed permanent border controls after a deadly knife attack in Bavaria and arrest of an Afghan asylum-seeker.

However, the day after he won the election, Merz sent a different message, saying, “None of us is talking about closing borders.”

It is a shaky start to a new government that will have to contend with the fraught issue of immigration, including a spate of terror attacks and crimes committed by immigrants.

From the Feb. 13 incident in which an Afghan asylum-seeker plowed into a crowd in Munich with his car—injuring at least 30 people and killing a 2-year-old girl and her mother—to the knife attack that killed a toddler and an adult in the Bavarian town of Aschaffenburg, Germany is reeling from multiple suspected terror attacks committed by immigrants.

Establishment parties have increasingly moved away from long-standing progressive stances on immigration by, for example, reintroducing border checks.

Polling suggests that 80 percent of Germans believe that immigration levels have been too high over the past decade.

According to official crime statistics, 34.4 percent of criminal suspects in Germany in 2023 were not German citizens. This is a 13.5 percent increase from the previous year, compared with a 1 percent rise in crime among German citizens.

The country has gone through a major population change, with Germany’s net population increasing by more than 3.5 million between 2014 and 2024, driven entirely by migration.

In 2015, then-Chancellor Angela Merkel accepted more than 1 million Syrian refugees into Germany.

5. The Economy

Germany has been struggling with the loss of affordable Russian gas, Volkswagen plant closures, and fierce competition from cheaper Chinese electric vehicles.

The combination of energy crises, political instability, and declining competitiveness threatens Germany’s long-standing status as the major industrial force of the European Union.

Germany recently voted out a Green Party coalition that had plans to make 80 percent of electricity in the country “green” by 2030.

The country has aggressively pursued weather-dependent renewable energy, and now finds itself more dependent than ever on imported electricity while also trying to wean itself off piped-in Russian gas.

The CDU has stated that it was examining “the possibility of restarting operations at the nuclear power plants that were recently shut down.”

However, Merz has appeared to dismiss this option.

“They are being dismantled; they are being decontaminated,” the CDU leader said at a meeting with a conservative workers’ union, according to reporting from Euractiv on Jan. 17.

“There is no way to fix this, most likely,” he said, noting that chances of reactivation are “lower by the week.”

Reuters contributed to this report.