These hurdles Merz still has to overcome by Christmas - Merz races against time to resolve crises before Christmas deadline
One urgent issue is the stalled cost-cutting bill, now stuck in the mediation committee after the Bundesrat referred it back. Time is running short to find a compromise before the year ends. Industry groups have warned that further delays will create uncertainty for both businesses and consumers.
Health Minister Nina Warken has stressed the need to prevent health insurance premiums from rising on January 1, 2026. But insurers have already signalled that higher supplementary charges may still be necessary to rebuild reserves. Any delay in action could push costs up even sooner.
The coalition also needs to finalise the pension commission, which will propose major reforms to the retirement system. Disagreements between the CDU/CSU and SPD over its composition could turn into another political battle before Christmas.
On the defence front, a decision on Europe’s largest project—the Future Combat Air System (FCAS)—must be reached by year’s end. Negotiations between France’s Dassault Aviation, Germany’s Airbus Defence and Space, and Spain’s Indra Sistemas have stalled over industrial shares and leadership. France wants Dassault to take up to 80% control, leaving Airbus sidelined. Germany has threatened to explore a national alternative if the dispute isn’t resolved.
At the EU summit on December 18, leaders will decide whether to use Russia’s frozen assets to fund further support for Ukraine. The move could free up billions but requires unanimous agreement.
Finally, the coalition must address the heating law inherited from the previous government. With a multibillion-euro budget gap looming, ministers aim to present a solution before the new year.
The coming weeks will determine whether the government can resolve these disputes in time. Decisions on defence, healthcare, and pensions will shape policy well into 2026. Any failure to act risks higher costs, legal uncertainty, and strained relations with EU partners.
