Merz's Coalition Blueprint: Navigating Germany's Economic Crossroads

Friedrich Merz's German conservatives are set to announce a coalition deal with the SPD, aiming to revitalize Germany's economy amid global trade tensions. With the potential for recession increasing due to U.S. tariffs, the coalition seeks to engage in free trade talks. Political challenges persist as the AfD gains ground.

German conservatives led by Friedrich Merz are expected to reveal a coalition agreement with the center-left Social Democrats (SPD) in an effort to boost Germany's struggling economy amidst global trade tensions. A deal is anticipated by midday, as Merz and SPD leader Lars Klingbeil work to finalize negotiations.

The urgency to form a government is heightened by escalating trade conflicts, as U.S. tariffs intensify recession risks. Outgoing Finance Minister Joerg Kukies emphasized the need for a decisive government, backing a potential EU-U.S. free trade zone while considering further trade agreements.

The coalition, excluding the far-right Alternative for Germany (AfD), faces political hurdles, with the AfD leading recent polls. Economic strains are evident as growth forecasts plummet and European markets react negatively. Amidst these challenges, Merz seeks to strengthen defense spending and support struggling businesses.

(With inputs from agencies.)