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Asylum and tax cuts among the central topics, formal negotiations on the way

Friedrich Merz, leader of the German Conservatives (CDU) and likely next chancellor, has announced that he has reached an agreement in principle with the Social Democrats of the SPD to form a new government. The understanding comes in the wake of the 23 February elections and marks an important step towards a coalition between the two camps. ‘We have reached agreement on a number of issues,’ Merz said, emphasising awareness of the challenges facing the new government, particularly in the international context.

Key points in the preliminary document include measures on immigration and the economy. Merz anticipated that asylum seekers will already be turned away at the border, but only in coordination with the neighbouring countries, by strengthening border controls. On the economic side, a reduction in electricity taxes is planned, intended to relieve consumers and businesses of the burden of energy inflation.

Another significant tax measure concerns the reduction of VAT at restaurants, brought down to 7% from 19%. This measure, explained by CSU leader Markus Söder, had been temporarily adopted during the pandemic, but revoked in January 2024 amidst controversy. In addition, the parties agreed, although without specific details, on a reduction of the tax burden for the middle class.

After the conclusion of the exploratory talks, formal negotiations between CDU/CSU and SPD to draft the government programme will start next week, once the committees of the two parties approve the document. The discussions will also include the division of government posts. The process to form the new government, according to Merz and SPD leader Lars Klingbeil, could be completed by Easter.

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(Photo: © AndKronos)

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