Overview
- The coalition, which met for about six hours Tuesday at the Chancellery, set a coordinated reform schedule and agreed to hold the CO2 price next year at 55 to 65 euros, with costs covered by the Climate and Transformation Fund to avoid a jump many experts expect from market pricing.
- No sweeping deals were struck, leaving core fights unresolved over pension design, how to finance tax relief for lower and middle earners, and proposed flexibility to the eight-hour working day.
- Following Tuesday’s tense DGB congress, Chancellor Friedrich Merz was booed as he defended reforms, DGB leader Yasmin Fahimi—re-elected with 96 percent—warned against rolling back the eight-hour day, and Finance Minister Lars Klingbeil backed the 48 percent pension level and tougher pursuit of tax evasion.
- Next steps now include talks with unions and employers at the Chancellery in early June and another coalition summit before summer to try to bundle decisions on taxes, labor rules, pensions, and red tape; leaders also said the 2027 budget gap will not be closed by tapping federal reserves.
- Fresh polling underscores the pressure on the government, with a Forsa survey reporting only about 11 percent satisfaction with its work and the AfD leading nationally.