Friedrich Merz urges German cabinet to accelerate post-recess economic reforms

Economic focus at Neuhardenberg retreat

German Chancellor Friedrich Merz called on the black-red federal cabinet to accelerate the rollout of economic policies agreed before the parliamentary summer recess. The chancellor set the agenda ahead of a two-day closed-door cabinet retreat scheduled for Tuesday and Wednesday at Schloss Neuhardenberg in the state of Brandenburg. Merz stated that strengthening German competitiveness and securing domestic employment remain the core priorities of his government. The gathering will bring together federal ministers from the Christian Democratic Union and the Social Democratic Party to coordinate executive action. Speaking to Bild am Sonntag, Merz noted that his administration will concentrate its attention on providing rapid and broad relief to businesses, specifically targeting the craft sector, tradespeople, and small and medium-sized enterprises.

At stake in Germany are growth and employment. That is the most important issue. So full concentration on that, keep your eye on the ball.

Priority measures and legislative package

The targeted policy package covers taxation, statutory pensions, bureaucratic deregulation, and administrative digitalisation. Before the summer break, the coalition passed the statutory health insurance savings law and the Building Modernization Act, which introduced updated regulations for heating systems, through both the Bundestag and the Bundesrat. In the coalition committee, the CDU and SPD agreed on additional tax reductions for small and medium incomes starting in 2027, along with revisions to labor law and further cuts to corporate paperwork. The federal government also committed to fully implementing the recommendations submitted by the pension commission to stabilize long-term provisions.

We made historic decisions before the summer break. Now they must be implemented as quickly as possible.

Internal pushback and state-level resistance

The federal agenda faces mounting pushback from business lobbies, parliamentary opposition, and members of Merz's own conservative party. Saxony Minister-President Michael Kretschmer announced that he will refuse to approve the planned pension and long-term care reforms when the legislation is put to a vote in the Bundesrat. The refusal from Dresden creates potential legislative friction for the coalition, as state chamber approval remains necessary for several structural components. Merz dismissed demands to renegotiate the pre-recess agreements, asserting that the coalition will not yield to external or internal political pressure.

The federal government will not be deflected from its course, we know what is right and good for the country. We will not be unsettled.

Climate resilience on the cabinet agenda

In addition to industrial competitiveness and statutory reforms, the Neuhardenberg retreat will examine domestic environmental adaptations. Deputy government spokesperson Sebastian Hille announced that the cabinet will discuss federal programs designed to increase protection against severe heat and other consequences of climate change. The ministers will review coordinated health and infrastructure plans alongside their economic deliberations during the two-day session in Brandenburg. The coalition aims to finalize its autumn legislative schedule at the retreat, preparing the remaining statutory drafts for parliamentary review.