Initial Takeaways on the New Coalition Agreement

Germany is back!

Today, under the leadership of Friedrich Merz, the heads of the upcoming coalition parties in the German parliament, presented the coalition agreement that sets the government work agenda in the new legislature. The party heads send out a strong signal, both at home and abroad: Germany is back, with an ambitious programme for renewal and future orientation – backed up by an equally ambitious budget.

The aim is clear: unleash new dynamics in industry and SMEs, in society, business, and politics – in Germany and in Europe.

This is the clear expectation against which the new government will be measured.

Here are our key take aways from the coalition agreement:

• The new coalition agreement between CDU, CSU and SPD outlines a reform agenda across key areas: economy, housing, digitalization, infrastructure – and also commits to major shifts in defence and migration policy.
• It rightly identifies the pressing challenges facing Germany – from economic stagnation to geopolitical threats – and sets out a broad vision for renewal.
• There is clear ambition, especially in promoting growth through a new Germany Fund, strengthening startup ecosystems, accelerating planning and permitting processes, and simplifying housing regulations. The digital agenda is also comprehensive, aiming to modernize state services and infrastructure.
• On defence, the coalition pledges to significantly increase Germany’s deterrence and response capabilities. A multi-year financial and structural commitment is planned, with investments in military readiness, infrastructure, and procurement. Germany is set to become a credible pillar of European and NATO security – a shift with both fiscal and strategic weight.
• On migration, the agreement emphasizes border enforcement, clear rules on entry and return, and improved structures for labour migration and integration. The dual message is firm: control and order on one side, openness and opportunity on the other.

However, the agreement often lacks concrete timelines, measurable goals, and financial clarity. Key elements, such as national housing targets, digital investment volumes or the exact defence spending trajectory, remain vague. Many initiatives are dependent on state-level implementation, which poses a challenge to coherence and speed.

The coming weeks will be crucial: The SPD will conduct a digital membership vote (minimum 10 days), CDU and CSU will finalize approvals in their party bodies, and the Bundestag is expected to elect the new Chancellor on May 7. Ministerial appointments will follow thereafter.

This agreement sets a reform-oriented tone – but without bold implementation, it risks falling short of the needed breakthrough. Now is the time to turn direction into delivery!

Bernd Buschhausen, Managing Director, H/Advisors Deekeling Arndt

bernd.buschhausen@h-advisors.global