German coalition talks reach next level as CDU and SPD negotiations intensify

The leaders of the centre right Christian Democratic Union (CDU), Christian Social Union (CSU) – the CDU’s sister party that only operates in the south-eastern German state of Bavaria – and centre left Social Democrats (SPD) gave statements to the press, as coalition talks to form a new German government reached the next stage.

CDU leader and Germany’s most likely next chancellor Friedrich Merz said there are still “some hurdles ahead,” but remains confident that the parties will manage to come to agreement.

Bavarian Minister President Markus Söder and SPD party chairpersons Lars Klingbeil and Saskia Esken joined Merz in speaking about their optimism for the coalition negotiations.

The next round of negotiations is largely expected to boil down to how to finance the election promises through taxes and tax cuts.

The CDU wants to reduce corporate taxes from next year, while the SPD wants to reduce it from 2029, and the SPD also wants to increase income tax for high earners, which the CDU would prefer to avoid.

The CDU and SPD also differ on policies including turning asylum seekers back at the border, financing pensions through extending retirement age, a return to military conscription and the EU ban on combustion engines from 2035.

Whilst Merz is aiming to form the new government before Easter, which falls on April 20 this year, the first week of May could be more realistic.

Members of the SPD will also vote on the proposed coalition agreement that is reached between SPD and CDU, which is expected to take 10 days, and should not be over Easter.

The parties are under pressure to form a government and elect a chancellor as soon as possible, with Germany facing economic and security challenges.