5 Problems Facing Germany’s Election Winners

Friedrich Merz, leader of Germany's conservative Christian Democratic Union (CDU) 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 this weekend, but the party faces major issues.

After seeing off the new 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, tensions around immigration control, all while AfD watches on as the CDU’s major political adversary. Before all 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 (CSU), won the election, capitalizing on widespread discontent over inflation, rising energy costs, and immigration policies, to get 28.5 percent of the vote combined.

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

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

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 two-way so-called “grand coalition” formed by his conservative bloc and Olaf Scholz’s Social Democrats center-left (SPD), which got 16.4 percent of the vote, which would give the coalition a slim majority.

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

2. AfD

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

The party has courted controversy.

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

In both Saxony and Thuringia, the regional branches of the AfD are considered more right-wing than the main party. Young Alternative Thuringia was classified as a “right-wing extremist” in March 2024.

AfD leader Alice Weidel has denied 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.”

The 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 the 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 that the next chancellor would be held hostage 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,” she added.

3. Debt Brake

Germany, Europe’s largest economy, known for its skilled labor force and high-end exports, faces significant hurdles, which has 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 GDP, adjusted for the economic cycle.

The idea of a debt and fiscal responsibility taps into the national psyche because about 60 percent of Germans are in favor of keeping the debt brake. 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 statistics office reported on Feb 25, which raises a big question 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, though such a reform would require two-thirds support in Parliament.

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

With both the AfD and Die Link opposing military spending arising from the Ukraine-Russia war, both 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 from an Afghan asylum-seeker suspect.

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

It’s a shaky start to a new government that will have to contend with the fraught issue of immigration. This includes dealing with a spate of terror attacks as well as crime committed by immigrants.

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

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 2023 were non-German citizens, a 13.5 percent increase from the previous year, compared with a 1 percent rise 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.

Then-Chancellor Angela Merkel in 2015 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 threaten Germany’s long-standing status as the major industrial force of the European Union.

Germany recently voted out a Green Party coalition which 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 said it was examining “the possibility of restarting operations at the nuclear power plants that were recently shut down.”

However, Merz appeared to dismiss this option.

“They are being dismantled, they are being decontaminated,” the center-right 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.”

Chances of reactivation are “lower by the week,” Merz said.

Reuters contributed to this report.