Following the Union’s victory in the 2025 Bundestag election, coalition talks between the CDU/CSU and SPD are gaining momentum. The two parties are currently in exploratory discussions, with a black-red coalition emerging as the most likely outcome. CDU leader Friedrich Merz has ruled out cooperation with the far-right AfD, and while a three-way coalition with the Greens remains a possibility, negotiations with the SPD are taking priority.
One of the most pressing issues on the table is the reform of Germany’s debt brake to finance two major spending packages: One for increased defense expenditures and another for critical infrastructure investments. Both parties have agreed in principle to lift existing debt restrictions, a move that would allow billions to be borrowed for these purposes. Given the urgency of the matter, Merz has proposed leveraging the two-thirds majority of the outgoing Bundestag to push the measures through before the new parliament convenes.
The talks are progressing at an unprecedented pace. In a rare move, major financial decisions are being made even before formal coalition negotiations have concluded. Merz has justified the rush by pointing to escalating global security concerns and the need to send a strong signal ahead of key international summits. The timing is also significant, with the European Commission urging swift action in response to the latest policy moves by U.S. President Donald Trump.
Despite the rapid progress, many challenges remain. The SPD and Union must finalize policy details, secure parliamentary approval, and navigate opposition from other parties. If successful, the new coalition could take shape by April, with Merz aiming to be elected Chancellor by the week of April 23.