Exit polls on Sunday showed the Christian Democratic Union (CDU) trailing far‑right Alternative for Germany (AfD) and losing heavily in Saxony‑Anhalt, Berlin and Mecklenburg‑Western Pomerania, prompting Merz to declare his intention to stay on and complete the reform agenda he unveiled in July.
The centre‑left Social Democratic Party (SPD), Merz’s coalition partner, also suffered heavy defeats in Saxony‑Anhalt and Berlin but retained control in Mecklenburg‑Western Pomerania, and its leadership issued a joint statement pledging to keep the CDU‑SPD alliance intact.
Inside the coalition, pressure is mounting for the government to modify its reform programme. An SPD strategy document circulated this week warned that “there can’t be a simple carrying on as normal after the state elections” and called for a “German ‘New Deal’” to address the transition period, with a special party meeting slated for December to draft new policy proposals.
One of the most contentious proposals is the plan to scrap the option for workers to retire at age 63 with a full pension after 45 years of contributions. The measure, recommended by a government‑appointed pension commission, is intended to keep the pension system sustainable as the population ages, but eastern state premiers from both the CDU and SPD have already demanded its reversal, citing “enormous uncertainty” among workers and employers.
Two days before the elections, Merz attempted to blunt voter discontent by announcing a €2.5 billion tax cut and a price cap for motorists to offset soaring fuel prices linked to the Iran war, a move aimed at easing the pressure of squeezed living standards and rising inflation that dominated the polls.
Analysts warn that reshaping the reform package now could undermine confidence in German policy planning at a time when the country is emerging from years of recession and seeking modest growth. “If we start this whole process again now, it just delays these reforms and we need them,” said Martin Jacob, a professor at Spain’s IESE Business School and member of the German finance ministry’s scientific advisory board.
The election results also highlighted the growing strength of the AfD, which polls this week show approaching 30 % support nationwide, underscoring the political challenges Merz faces in delivering his pro‑business agenda while maintaining coalition cohesion.