Just six weeks after the February 23 elections, Germany enters a new political phase under Chancellor Friedrich Merz and an unprecedented black-red coalition between CDU/CSU and SPD. Despite a narrow parliamentary majority and historically low support for both governing parties, the coalition agreement—titled “Responsibility for Germany”—sets forth a pragmatic agenda shaped by economic stagnation, geopolitical turbulence, and rising political fragmentation.

The new government promises targeted tax relief, a €1 trillion off-budget investment plan via constitutional reform, and a renewed push for digitalization and technological sovereignty. However, structural fragilities remain. Public trust is low, the far-right AfD is surging in polls, and the coalition’s legislative program is seen as contingent on fiscal and political feasibility. On foreign policy, Berlin signals strategic recalibration: reaffirmed support for Ukraine, a cautious rebalancing vis-à-vis Washington, and steps toward European defense autonomy.

This report explores the composition, priorities, and vulnerabilities of Germany’s new government—framing it as both a critical opportunity and a high-stakes test for the future of democratic centrism in Europe’s largest economy.