Country's New Administration: Positive National Spirits?
In the heart of July 2025, Germany's economic landscape is displaying a blend of optimism and challenges. The consumer climate indicator, as measured by GfK, predicts a slight decline to -20.3 points compared to the previous month, reflecting a cautious consumer mood [1]. However, research institutions are increasingly optimistic about Germany's economic outlook, with Chancellor Friedrich Merz introducing a "turn point" economic policy aimed at stimulating growth [2].
The new federal government, led by Chancellor Merz, has received mixed approval ratings. The CDU/CSU, under Merz's leadership, has seen a slight improvement in support, with an approval rating of 30% as of early July [3]. However, the coalition's junior partner, the Social Democratic Party (SPD), continues to lose support, with an approval rating remaining at a historical low of 13% [3].
The government's economic policies have been met with praise from the German Chamber of Industry and Commerce, which commends the pace at which initial proposals have been put forward [4]. The Federation of German Industries shares a similar view, anticipating an economic recovery to be pending [4]. Yet, the Federation still expects a slight recession this year [5].
One area of contention has been the government's migration policies. Merz's administration has implemented stricter border controls and eliminated expedited naturalization, measures framed as necessary for maintaining Germany's values while remaining open to the world [2]. However, these policies have drawn criticism from some quarters, with the Federation of German Consumer Organizations criticizing the coalition for not lowering the electricity tax for everyone, as promised [6].
The recent spat over the appointment of constitutional judges last week has made the grand coalition appear very divided [7]. Despite this setback, Chancellor Merz has emphasized that his government has built a "stable foundation" [8]. The government has initiated a program to encourage investment and raised defense spending [8].
Matthias Jung of the Forschungsgruppe Wahlen suggests that credible announcements of measures could potentially improve sentiments among consumers [1]. As many consumers continue to grapple with persistently high living costs [6], the government will need to navigate these challenges carefully to maintain public support.
- The government's economic policies, as outlined by Chancellor Merz, are being debated extensively in the realm of policy-and-legislation, with the German Chamber of Industry and Commerce praising the pace at which initial proposals have been put forward.
- The general-news is abuzz with discussions about Germany's political landscape, as the mixed approval ratings of the new federal government and recent debates over migration policies have raised questions about the coalition's unity and effectiveness.
