Merz channels Merkel's 'We can do it' as German coalition races to deliver reforms before summer break

The reform race before the summer

Germany's black-red coalition government is racing to finalise a sweeping reform package covering taxes, the labour market, pensions and bureaucracy reduction before the parliamentary summer break begins in mid-July. The timeline is driven by three state elections in September in Saxony-Anhalt, Berlin and Mecklenburg-Vorpommern, where the CDU is under significant pressure. The coalition has placed all promised improvements from its coalition agreement under a financing reservation, meaning expectations raised during negotiations must now be managed downward due to lower-than-expected economic growth and tax revenue forecasts.

Merz adopts Merkel's mantra

Speaking at the CDU state party conference in Linstow, Mecklenburg-Vorpommern, Chancellor Friedrich Merz sought to project confidence in his government's ability to modernise Germany. He directly echoed the phrase made famous by former Chancellor Angela Merkel during the 2015 refugee crisis.

We can do it, we can manage it if we all stand together and if we believe in ourselves a little more again.

Merz insisted that Germany has the strength for the necessary reforms and a new departure, pointing to plans for digitalisation and de-bureaucratisation. He described a vision of Germany as a global pioneer in modern climate protection, with high-performance infrastructure, reliable trains, fast data, secure energy and the most capable conventional army in Europe.

Social security systems under strain

The most advanced reform is in statutory health insurance, where a savings package has already left the federal cabinet for the Bundestag and is scheduled for its first reading next week. The government was forced to act because the funds covering roughly 75 million people are running out of money, with a government expert commission forecasting a deficit for the coming year. The broader goal across pension, nursing care and health insurance is to at least stabilise contribution rates, though all three areas face significant future financing gaps driven by demographic change as the baby-boomer generation enters retirement.

State elections as a national test

Merz framed the three September state elections as having significance far beyond the regions themselves. He argued that what is at stake is whether the political centre still has the strength, will and assertiveness to tackle the country's problems. In Mecklenburg-Vorpommern, the CDU is polling at a historic low of 10 percent, with the AfD leading in both eastern states. On the federal level, a recent Insa poll for Bild puts the AfD at 29 percent, eight points ahead of the CDU.

It is about the question of whether we, from the political centre of our country, still have the strength, the will and also the assertiveness to tackle and solve the political problems we face today.

CDU rallies behind Peters in the northeast

At the same conference, the CDU in Mecklenburg-Vorpommern formally launched its state election campaign. Delegates unanimously adopted the 127-page election programme and re-elected Daniel Peters as state chairman with 97.2 percent support. Peters positioned the party to occupy what he called the "orphaned political centre," attacking the incumbent red-red state government while drawing a clear line against the AfD. He warned against polarisation in the campaign, comparing the political centre to a fish sandwich where the best part is always in the middle. The party sees education, the economy and internal security as its priority tasks.

We will not leave Mecklenburg-Vorpommern to the red-red decline or the blue downfall.

Budget gap adds pressure

Alongside the reform agenda, the coalition must close a gap of nearly three billion euros in the 2027 federal budget through internal negotiations in the coming weeks. The regular high-level round between the CDU/CSU and SPD leadership is meeting to address this, with the most time pressure on pensions, the budget and tax reform. The coalition aims for political agreement at the leadership level before the summer break.