Social change advocate Merz advocates for reforms, hinting at potential budget reductions - Social change advocated - emphasizing fiscal reductions
In a significant announcement made in Bonn, Chancellor Friedrich Merz, leader of the CDU party, outlined a series of reforms aimed at boosting employment and growth, as well as providing relief for municipalities struggling with debt.
The black-red coalition, consisting of the CDU/CSU (Union) and the SPD, has planned several legislative projects for this fall, in accordance with the coalition agreement. Among these projects is a reform of the citizens' allowance system, which is expected to undergo changes.
Chancellor Merz emphasised the need for savings, even with increased borrowing for defense and infrastructure. He stated that these reforms will involve "painful decisions" and cuts, and warned that if municipalities are no longer capable of acting and basic public services can no longer be guaranteed, democracy could be threatened.
The Chancellor announced a regulation to relieve particularly affected municipalities of their debt, effective from 2026. This debt relief is a small contribution from the federal government to ease the burden of past excesses. Merz also called for austerity measures to address the current system's unsustainability with current earnings.
Merz and the leaders of the coalition factions of Union and SPD have agreed on a work plan with projects to be implemented after the summer break. The Chancellor emphasised the importance of maintaining the performance of health, long-term care, and pension insurance, and avoiding overwhelming these systems in the future.
In a bid to change the trend of "living beyond our means," Merz advocated for urgent reforms of social systems. He hopes for serious and open debates with the other side in the coming weeks and months, stressing the need for personal responsibility to make these reforms successful.
The government's goal is clear: to increase employment, growth, and provide relief for struggling municipalities, all while ensuring the sustainability of crucial social systems. The milestone of the announced debt relief for municipalities marks a significant step towards achieving this goal.
