Public Policy

April 10, 2018

The new German Government: What key issues does it face?


After a protracted period of negotiation, Germany has agreed upon a government. Exactly 171 days after last year’s general election, Chancellor Angela Merkel was re-elected for her fourth term. It will also presumably be her last term, according to her own statements. Following the uncertainty of past six months, the new government faces several challenges and policy makers must act on a number of key issues.

Firstly, swift and deliberate steps will be required to settle a growing internal social and economic polarisation amongst wider society, particularly in the Eastern parts of Germany. Additionally, key transformation challenges in digitalisation of healthcare need to be addressed. Furthermore, Germany will need to take a clear stance on global issues looming between US, EU, Russia and China.

The make-up of the new government

There are a total of six parties in the German Bundestag, led by a grand coalition of Merkel’s CDU/CSU and the SPD. With the populist, far-right Alternative für Deutschland (AfD) party winning its first seats, and a return for the Liberals (FDP), the opposition will be louder than before.

The Social Democrats (SPD) side has also been vocal in arguing for more discussions with its coalition partner CDU/CSU to reach consensus on future legislation. This should mean, positively, more open and public discourse from the individual parties with clearer perspectives from both coalition parties. With much public scepticism, more distinguished profiles are almost mandatory in order to refurbish and inspire confidence in the parties. It remains to be seen how both will take on this challenge. A good mixture of old and new faces in ministerial positions as well as within party structures might be another first step towards regeneration.

The internal dynamics are important to explore. Annegret Kramp-Karrenbauer, former Prime Minister of the Saarland, was recently elected as the CDU’s new secretary general. Together with the young and politically conservative Jens Spahn, who will lead the Ministry of Health until 2021, the party may be reinvigorated. Kramp-Karrenbauer is likely to bring winning expertise, while Spahn will try to satisfy the conservative wings of the CDU and win over who voted for the populists in the last election. Crucially, both also have the potential to succeed Merkel as chancellor in the next general election.

Then there is the SPD. After Martin Schulz stepped down as the party leader in mid-February, Olaf Scholz is acting party leader but it is Andrea Nahles who is the SPD’s leader designate. Nahles, the previous minister for Labour and Social Affairs in the last government, is known for her energetic speeches and will most likely be elected as SPD party chair on 22nd of April. In doing so, she would become the first woman to lead the SPD.

Germany’s foreign policy and international relations

Despite internal struggles, the new government has made its first footsteps towards handling external politics and the schedule could not be busier for Merkel and her new ministers. In these times of global uncertainty, Germany seeks deeper cooperation not only with close European partners, but also with economic giants like China and the US.

Chancellor Merkel and newly sworn in Foreign Minister Heiko Maas travelled to Paris last month, the first right move to promote greater European cooperation, and opposing the growing tide of European nationalism. Finance Minister Olaf Scholz also travelled to Buenos Aires to meet with other G20 finance ministers to discuss the future of world trade and globalisation. And Economic Minister Peter Altmaier headed to Washington to oppose US tariffs and duties on steel and aluminium.

Whether on domestic or global level, the signs are on reform and change, instead of the status quo many have gotten used to from Angela Merkel.