German chancellor vows gradual reforms despite coalition tension

German Chancellor Friedrich Merz on Wednesday assured business representatives that his government would pursue fundamental economic reforms gradually, stressing that "the need for structural reforms is great." Speaking at a Berlin gathering of the "Made for Germany" initiative, Merz stated that no one should doubt his determination to continue implementing reforms step by step, according to the German Press Agency.

Labor market and coalition tensions

The chancellor cited labor market flexibility as a priority, noting that "we have some catching up to do there" ahead of next week's coalition committee discussions on a series of labor market laws. He also highlighted plans to deepen the EU single market and reform Germany's pension system, though both measures face resistance from his junior coalition partner, the Social Democratic Party.

The SPD has signaled opposition to abolishing full pensions after 45 years of contributions and remains skeptical of labor market deregulation efforts. Merz pointed to upgraded economic projections from research institutes for this year, attributing the brighter outlook to billions in debt-financed infrastructure spending through a special fund.

Digital competitiveness

Turning to digital competitiveness, Merz urged small and medium-sized enterprises to exploit their data resources more effectively, arguing that "small and medium-sized enterprises in Germany must make better use of their data." He noted that leveraging this industrial data would give Germany a unique competitive advantage given the country's diverse and deeply stratified SME sector, though he cautioned that Berlin has yet to achieve a self-sustaining economic upswing for the coming years.