Friedrich Merz, Germany’s embattled chancellor, is running into a political storm, with significant repercussions for economic reforms needed to restore growth and competitiveness in Europe’s largest economy. Suffering rising opposition within his centre-right Christian Democratic Union after the far-right Alternative for Germany’s (AfD) landslide win in eastern Germany on 6 September, Merz faces gruelling pressure in coming weeks.
One factor encouraging him to stand firm against adversity is the Berlin government view that the AfD’s well-planned bid for power is benefitting from behind-the-scenes Russian interference through social media manipulation and other activities. Other parties with strong showing in east Germany – left-wing Die Linke and the BSW movement led by activist Sahra Wagenknecht, which may build an informal alliance with the AfD – also have pronounced pro-Russian leanings. Abandoning Merz’s chancellorship after less than two years in office would deal a catastrophic blow to the West’s efforts to shore up Ukraine after four years of war against Russia.
The largest immediate threat to Merz may come from his fragile government partner, the Social Democratic Party (SPD), which has lost ground heavily since joining the CDU and its conservative Bavarian Christian Social Union sister party in a loveless coalition in April 2025. Merz officials have labelled the SPD the ‘weak link’. Immediately after the Saxony-Anhalt result, Lars Klingbeil, deputy chancellor, finance minister and SPD chairman, urged a dilution of reforms he previous supported – a blatant effort to bolster SPD support in two more crucial eastern German elections on 20 September.
Fragility in the face of populism
The anti-immigration, anti-euro AfD is receiving open support from President Donald Trump’s administration – an alarming juxtaposition with overt backing from the Kremlin. Merz cancelled a planned 9 September telephone call with Trump after the president, in a message on his social media platform, congratulated the AfD on its Saxony-Anhalt victory.
The Trump team’s closeness to the AfD, together with the prospect that Ulrich Siegmund, the party’s Saxony-Anhalt leader, will soon become post-war Germany’s first far-right head of regional government, could however reverberate against the populist party. Trump is widely disliked in Germany. In addition, mainstream politicians are hoping that Siegmund’s appeal for protest voters in the small east German state will diminish once he is confronted with day-to-day governmental realities.
Unless the CDU suffers worse-than-expected setbacks in state legislature elections in Mecklenburg-Lower Pomerania and Berlin on 20 September, Merz seems unlikely to resign. He can be expected to battle on to push through parliament modest tax cuts and unpopular restructuring of pensions and healthcare systems.
However, latest opinion polls and widespread signs of a precipitous decline in his authority add up to incessant bad news. If the tide turns further against him in the next fortnight, Germany and Europe face a bruising autumn that could see a further government shake-up, just two years after the collapse in November 2024 of the embittered coalition of SPD Chancellor Olaf Scholz with the CDU/CSU and the Greens.
Merz will hold out despite calls for elections
With the AfD leading national opinion polls and calling for early general elections, the CDU’s own weakness could yet prove a source of consolation. Hendrik Wüst, the relatively youthful CDU prime minister of Germany’s most populous state, North Rhine-Westphalia – and one of Merz’s main rivals – seems unlikely to wish for the chancellorship in coming months when the party is in disarray and likely to lose further ground from debilitating internal infighting.
Wüst faces a NRW state election in April next year. Forsaking the state chancellery to take over in Berlin would weaken the CDU’s own hold in Germany’s biggest state legislature.
Markus Söder, the hard-talking CSU leader and Bavarian premier minister, would be a rhetorical match for the AfD but his right-wing politics would be anathema for many in the SPD. This could break the coalition and lead to the early national election that the AfD (and, government insiders believe, Russia) has been aiming for all along.
Much depends on Merz’s own personal resilience. The chancellor has responded to the AfD’s breakthrough with uncharacteristic contrition combined with an emotional attack on the far-right party’s policies on migrant deportations. In the Bundestag on 9 September he accused the AfD of espousing ‘ethnic cleansing’. This led to criticisms of exaggeration from within CDU/CSU ranks, as well as threatened AfD libel action.
Officials admit that Merz, held back by his unbending intellect, brittle personality and difficulties in exuding personal charm, has not found ways of advocating governmental policies that convince his own followers, let alone the rest of the electorate.
Damage limitation for the moment
Merz is facing calls to counter the AfD by watering down more stringent reforms, reducing further payments to immigrants, producing much larger tax cuts and supporting small businesses.
Ideally, he would use the coming weeks to launch a personal crusade on refocusing the German economy, underpinning the European single currency, strengthening Nato and enhancing Europe’s self-sufficiency vis-à-vis the US and China.
It is not too late for such a mission. But for the time being the chancellor’s recipe for damage limitation appears to be to minimise his public appearances.
Meanwhile, Angela Merkel, the last CDU chancellor, has underlined her antagonistic relationship with Merz by indirectly questioning the ‘firewall’ preventing any co-operation between the AfD and the CDU/CSU grouping. Merz’s governmental ethos is based on hermetically sealing off Germany’s mainstream centre-right parties from the AfD, based on the widespread contention that the party contains significant neo-Nazi elements.
Merz built his credo as chancellor on a vow to halve the AfD’s voting support. His strategy has failed. Less than 18 months later, in Saxony-Anhalt, the AfD doubled its electoral following compared with 2021 – while the CDU’s own score was halved. Merz’s defence is that he doubts whether any other centre-right leader could have performed better. That is far from being a watertight excuse – and later in the autumn, it could start to look fatally thin.
David Marsh is Chairman of OMFIF. Andreas Meyer-Schwickerath is a Berlin-based OMFIF adviser.
On 17 September, Olli Rehn, governor of the Bank of Finland, joins OMFIF to discuss the outlook for the European economy and monetary policy amid an evolving global landscape.
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