Incoming chancellor cautions Germans of dropping income

2025-04-19 11:17:14

(MENAFN) Friedrich Merz, Germany's incoming chancellor, has warned that many citizens may experience a decline in their net wages during his term due to rising social security contributions and uncertain tax relief policies. In a recent interview with the tabloid Bild, Merz acknowledged that the growing costs of the country's pension, health, and long-term care systems are outpacing reforms, which is affecting household incomes.

"Unfortunately, that’s exactly the trend," Merz said, admitting that the necessary reforms had not been implemented over the past 30 years. When asked if this would lead to reduced disposable income for citizens, he stated, "From today's perspective, these fears are certainly not unfounded." However, he assured that it would be his government’s task to address these concerns and improve the situation by the end of the electoral term.

Merz confirmed that his coalition agreement with the Social Democrats (SPD) includes a guarantee that pensions would not fall below a certain threshold until 2031. However, he also indicated that upcoming health and long-term care reforms would lead to increased costs for households.

The CDU/CSU and SPD have yet to agree on an income tax relief package, but Merz emphasized their commitment to reducing corporate taxes. Regarding criticism of his party’s promises during the election campaign, especially concerning the “debt brake” (a constitutional rule limiting government borrowing), Merz acknowledged the backlash. Despite previously advocating for strict borrowing limits, Merz’s coalition and the SPD proposed a €1 trillion debt-financed spending package to invest in defense and infrastructure.

Merz is expected to be formally confirmed as chancellor in the coming weeks, though negotiations with the SPD continue. Public support for his CDU/CSU bloc is currently at 24%, according to a recent Ipsos poll, with the right-wing Alternative for Germany (AfD) surpassing it by 1%.

MENAFN19042025000045015687ID1109448337

Legal Disclaimer:
MENAFN provides the information “as is” without warranty of any kind. We do not accept any responsibility or liability for the accuracy, content, images, videos, licenses, completeness, legality, or reliability of the information contained in this article. If you have any complaints or copyright issues related to this article, kindly contact the provider above.