(de-news.net) – The German coalition government has come to a fundamental agreement on welfare state reform after much discussion. While acknowledging the need for economic austerity, Chancellor Friedrich Merz (CDU) and Labor Minister Bärbel Bas (SPD) reaffirmed their commitment to maintaining the fundamental functions of the social system. With Merz calling for savings of up to five billion euros and Bas suggesting higher participation criteria, the reform seeks to improve employment prospects and reduce the misuse of the Bürgergeld.

The coalition also plans to strategically connect with important industries in order to promote economic recovery. Merz announced planned discussions on technological innovation and global competitiveness with the steel and automobile industries. Markus Söder, the leader of CSU, underlined the urgency to further develop autonomous driving and shield homegrown manufacturing from foreign hegemony.

Although there is agreement to keep healthcare contribution rates the same until 2026, there is still disagreement about how to achieve fiscal consolidation. A 30-billion-euro budget deficit for 2027 was brought to light by Finance Minister Lars Klingbeil (SPD), who emphasized the necessity for a comprehensive solution that avoids tax hikes or protracted internal conflicts.

Concerns about the coalition’s aims and pace were highlighted by criticism from opposing parties and local groupings. The German Association of Cities and the Left questioned the concentration on Bürgergeld, pointing to rising costs in other social services, while the Greens demanded immediate action on cost cuts and regulatory reforms.

The coalition leaders promised a more positive approach going forward and admitted to past misunderstandings. However, the larger problem of long-term budgetary planning still exists, and specific legislative solutions are still pending.