How Germany’s Parties Are Seeking to Win Over Skeptical Voters

The sluggish economy has sparked fragmentation and frustration, throwing open the campaign for chancellor.

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Bloomberg News

Kamil Kowalcze, Arne Delfs and Michael Nienaber

Published Jan 17, 2025  •  9 minute read

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(Bloomberg) — The campaign for Germany’s snap election has picked up speed as the candidates seek to win over an anxious electorate that’s looking for the next government to revive growth and secure living standards.

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After infighting led to the early end of Chancellor Olaf Scholz’s three-way coalition, the Feb. 23 vote will set the direction of Europe’s biggest economy and determine whether European Union integration stalls or progresses in a volatile geopolitical environment.

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The polls currently point to the Christian Democratic Union (CDU) and its Bavarian sister party (CSU), returning to power — although a lot can change as the vote nears. Led by Friedrich Merz, the conservative bloc’s path to the chancellery will be complicated by a fragmented landscape, with seven parties vying for seats in the Bundestag. 

Vice Chancellor Robert Habeck from the Greens is more popular than Scholz and could yet become the favored candidate for center-left voters. The main spoiler is the far-right Alternative for Germany, or AfD, which has nominated co-leader Alice Weidel as its first-ever chancellor candidate — though all other parties have ruled out cooperation with the anti-immigrant party.

As Germany grapples with its future, here’s an overview of how the most important parties are trying to win over voters in key policy areas.

Economy

After two years of contraction and little prospect of meaningful growth this year, reviving the economy is the most pressing issue for the next government. 

► CDU/CSU has presented a so-called “Agenda 2030” that aims to restore 2% growth. The bloc wants to lower the corporate tax rate to 25% from currently about 30% to free up more money for investment. To bolster middle-class incomes and in so doing boost consumption, it aims to raise the level of when the top income tax rate kicks in to €80,000 ($82,400) from about €67,000.

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► The SPD plans a debt-financed investment fund worth €100 billion to increase public investments in infrastructure and technology for the green transition. It also wants to unleash an investment boom by introducing a 10% tax rebate for corporate capital expenditures in German assets. To boost consumption and domestic manufacturing, it’s in favor of tax rebates for “Made in Germany” electric vehicles.

► The Greens have similar plans for a special debt-financed public fund as the SPD, which would help modernize Germany’s infrastructure, schools and support the transition to net-zero. Habeck has called for public investments of roughly €40 billion per year over a period of 10 years. He wants to use these funds for a 10% investment bonus for companies.

► The FDP aims to reduce the corporate tax rate to below 25% from 30%, cut the value-added tax for restaurant food to 7% and abolish a reunification levy for high-income earners. It demands a three-year freeze on new regulations to cut red tape.

► The AfD calls for lower taxes and a radical reduction of red tape, without going into details.

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Fiscal Policy

Scholz’s coalition ultimately collapsed over the 2025 budget, showing how delicate fiscal issues are. The reform of the country’s so-called debt brake to enable urgently needed investments will shape coalition talks and be one of the most important tasks for the next government.

► The CDU/CSU wants to stick to constitutional limits on borrowing. Merz, however, recently signaled that he might be willing to reform the rules to make them more flexible, especially with regard to the expected rapid increase in defense spending. The conservatives argue that planned tax cuts will be financed by additional economic growth. 

► The SPD wants to loosen the debt brake to enable more public investment. To stimulate domestic demand, the SPD plans to lower income tax for most households. It would raise revenue and offset plans to lower the sales tax for groceries by increasing taxes on the super-rich and re-introducing a wealth tax.

► The Greens are also in favor of loosening the debt brake to allow more room for investment. They would retain strict rules for spending on public consumption and plan to reduce government spending by trimming subsidies harmful to the climate.

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► The FDP wants to keep the debt brake as it is. Its fiscally conservative approach extends to the EU, where the party opposes joint borrowing. It also wants to reduce subsidies and divest state holdings.

► The AfD wants to stick to the country’s strict debt limits, but is vague on how it wants to finance its additional spending plans.

Energy

Energy costs are one of the most critical issues for businesses and households. Power and gas prices are still much higher than before Russia’s invasion of Ukraine, which led to Germany getting cut off from pipeline gas deliveries. 

► CDU/CSU plans to look at recommissioning nuclear power plants and abolish a reform that promoted electric-powered heat pumps over traditional boilers. The conservative bloc wants to pay out the proceeds from emissions trading as a climate dividend and cut subsidies for climate-friendly technologies.

► The SPD wants to halve power prices and cap grid fees. Alongside lowering costs for industry, it’s open to subsidizing household energy bills via direct payments to cushion the burden of carbon-emission costs. 

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► The Greens have backed off some hardline climate policies and have shifted to easing the impact on low-income households. To accelerate a transition to clean energy, they want to build overhead power lines instead of more costly underground cables. They also want to lower electricity taxes to the EU minimum, offset prices for energy-intensive companies and cover the costs for grid fees.

► The FDP has taken opposing positions to the Greens and seeks to postpone Germany’s climate neutrality by five years to 2050. It also wants to repeal the EU’s plans to phase out combustion-engine cars and vans in 2035, expand domestic production of natural gas and allow nuclear power plants to operate again.

► The AfD wants to pull Germany out of climate pacts. It would reverse the country’s coal exit, reintroduce nuclear energy and rebuild the damaged Nord Stream pipeline to import Russian gas again. Weidel has also vowed to tear down wind-energy masts.

Foreign Policy

Russia’s war of aggression against Ukraine, Donald Trump’s return to the White House and China’s efforts to expand its influence represent a challenge for Germany and its export-oriented economy. 

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► CDU/CSU wants to build ties with the Trump administration and sees transatlantic relations as a cornerstone of Europe’s security. That said, it wants Germany to play a stronger role on the foreign stage and plans to establish a national security council. It would also aim to make the EU more competitive and less bureaucratic. Merz is expected to adopt a more critical stance toward China. 

► While the SPD describes the US as Germany’s most important ally outside the EU, Scholz has taken issue with Trump over comments suggesting the US might take over Greenland. The SPD is also critical of China and proposes greater “de-risking” rather than a more abrupt “de-coupling.” The party wants to deepen EU integration and ease the bloc’s efforts to better assert its weight on the world stage.

► The Greens want close ties with the US and a strong stance toward China. On the EU, they are pushing for reforms that would replace unanimity with majority decisions and cut off funding for members that undermine the rule of law. They also buck the trend in Germany and want the EU to be able to raise its own financial resources. 

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► The FDP wants to downsize the European Commission and supports qualified majority voting for foreign and security issues. The party would scale back Germany’s development aid to redirect funds for domestic interests. It advocates retaining economic ties with China while de-risking. The party calls for withdrawing visas from Russian leadership.

► The AfD is friendly toward Russia. It calls for the end of sanctions and reviving ties with the Kremlin. The party also wants Germany to leave the euro and for the European Union to be wound down to a free trade zone.

Defense 

Faced with Russia’s military aggression and pressure from Trump for NATO partners to step up, defense policy will be a top priority for the next government, but maintaining spending levels could be a challenge. 

► CDU/CSU wants to increase defense spending and reintroduce some form of compulsory military service. The NATO goal of spending at least 2% of GDP for defense is described as the minimum. The conservative bloc has vowed to continue military aid for Ukraine and wants to take a leading role in the creation of a European missile defense shield. 

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► The SPD also plans to keep defense spending above 2% of GDP. Under Scholz, Germany achieved the NATO goal for the first time since it was agreed more than a decade ago, thanks to a special fund he established shortly after Russia’s invasion of Ukraine. While the SPD supports further weapon deliveries to Ukraine, it’s wary of escalation and for that reason Scholz blocked the transfer of long-range Taurus missiles to Kyiv.

► The Greens have abandoned past pacifism and back the 2% spending target. They want to broaden security issues to the EU level and promote more joint arms procurement, as well as combat-ready multinational troops within the EU and NATO. It supports Ukraine’s membership in the EU and NATO.

► Unlike the SPD, the FDP is in favor of supplying Ukraine with long-range Taurus missiles and supports the country’s accession to the EU and NATO. It wants a professional German volunteer army and calls for a joint EU army in the long term.

► The AfD wants to end the war in Ukraine and would cut off military aid. The party has conspicuously not criticized Russia’s invasion. It calls for the reintroduction of compulsory military service and higher defense spending.

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Migration

The arrivals of more than 1 million Ukrainian war refugees has revived concerns over an influx of foreigners. In the emotional debate, lines are often blurred between asylum seekers, irregular migration and legal migrants, which Germany needs to bolster its aging workforce.

► CDU/CSU calls for stricter controls of legal migration and would intensify efforts to halt illegal entries. As part of the hardline stance, it would repeal a recent law that allows for dual citizenship. Merz has threatened to revoke passports for naturalized Germans convicted of crimes. Aid programs for asylum seekers would also be scaled back. 

► The SPD has hardened its stance as well and plans to further accelerate deportation of rejected asylum seekers. It would maintain border controls at land crossings to fight illegal migration. The SPD though wants to stick to the citizenship law that makes it easier for foreigners to become Germans. It also wants to continue policies that lowered the hurdles for IT experts and other professionals from abroad.

► The Greens take a softer position and want to set up a panel of experts from academia, municipalities and refugees to advise the state on migration. They oppose outsourcing asylum procedures to third countries and instead call for “safe migration routes” to reduce “disorderly migration.” 

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► The FDP is against “immigration into the social system” and has suggested shifting authority for deportations from the states to the federal level. 

► The AfD has the hardest line on migration. It effectively wants to close Germany’s borders and calls for mass deportations under a program euphemistically dubbed “remigration.” 

Social Policy

Social benefits represent the biggest chunk of government spending, but cutting payments, especially pensions, risks sending more people into poverty and stoking tension.

► CDU/CSU aims to cut social spending by reforming the so-called Bürgergeld welfare program to try to force more people into the labor market. Pensioners who decide to work longer will receive a tax break for a monthly income of €2,000. 

► The SPD wants to maintain Germany’s social safety net, but would increase pressure on long-term unemployed to work in light of more than 1 million vacancies. It would keep public pensions stable despite concerns the system could collapse in the coming years as postwar Baby Boomers retire. To help low-income workers, the party would increase the national minimum wage 17% to €15 per hour. 

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► The Greens want to create incentives for welfare recipients to work rather than punish them for not working. The party would tighten rent controls to ease pressure from rising housing costs and a worsening shortage. Habeck proposed higher taxes on capital gains to contribute to social insurance schemes.

►  The FDP wants to tighten rules for unemployment benefits and require jobless people to prove they’re looking for work. It would cut benefits if that’s not the case.

► The AfD would prevent foreigners living in Germany from receiving welfare benefits and allow pensioners to work longer. 

—With assistance from Petra Sorge, Eamon Farhat and Zoe Schneeweiss.

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