Germans Are Running Short on Patience With Their Stumbling Chancellor

Friedrich Merz Photo by Krisztian Bocsi /Photographer: Krisztian Bocsi/Bl

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(Bloomberg) — When Friedrich Merz became Germany’s chancellor this year, he promised to revive a moribund economy, rebuild the nation’s neglected infrastructure and make the country relevant on the global stage again.

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His failure to deliver on many of these core issues has not only helped energize far-right parties like the Alternative for Germany, it’s also stoked speculation that Merz’s government may suffer the same fate as that of his predecessor, Olaf Scholz, and collapse before it completes its term. 

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Only 16% of Germans want to see Merz, who has just turned 70, as a candidate in the next federal election, according to a recent poll by RTL/n-tv, and his two-party coalition is paralyzed by internal conflicts and rivalries. German stocks, which surged as he took office, have been going sideways since the summer.

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“There are people in his caucus who are questioning all of the chancellor’s talk and asking themselves, where are the results?” says Sudha David-Wilp, a senior fellow at the German Marshall Fund in Berlin. “But the outlook is grim.”

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Merz took office at a daunting time for Germany. An erratic and occasionally hostile US president had just returned to the White House, the war in Ukraine had shut off the energy supplies for German industry and upended the country’s assumptions about security, while relations with China were deteriorating and the long struggle to manage immigration had fueled the rise of the far right. 

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In his first speech as chancellor, Merz promised to fix all that. 

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He said he would stop mass migration, turn the chronically under-financed Bundeswehr into Europe’s strongest army and end one of the longest economic slumps in post-war German history. 

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“We can, through our own efforts, once again become an engine of growth that the world looks upon with admiration,” Merz told lawmakers in Berlin. Germans would feel the first effects of renewed economic growth by summer, he promised. 

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Six months later, voters are still waiting. 

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Instead, they hear daily reports of economic uncertainty and job cuts at major German companies. Last week, Merz’s advisers trimmed their German growth forecast for next year to below 1%, underscoring the scale of challenge the chancellor faces in restoring meaningful expansion to the euro area’s biggest economy. They cited long-term problems with the economy and geopolitical changes that threaten Germany’s export model.  

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Investors, too, have been reassessing the outlook for Germany. Stock indices focused on the domestic have shown minimal gains since Sept. 30, after surging in the first nine months of the year. While defense stocks have tumbled, led by a decline of more than 20% in Rheinmetall AG. 

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While economists and officials recognize that it’ll take more than six months for the government’s €500 billion ($580 billion) infrastructure package to have a visible effect, voters are already getting frustrated that trains are still late, bridges are still crumbling, and highways are still closed. Politically, the only result of the plan so far has been that conservatives blame Merz for breaking a promise to contain borrowing and are worried about the country’s fiscal situation.