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Merz announces a turnaround in economic policy - criticism from the opposition is growing!
Chancellor Merz announces change in economic policy; The opposition accuses him of breaking his word. Analysis of the current situation.
Merz announces a turnaround in economic policy - criticism from the opposition is growing!
In the Bundestag on July 9, 2025, Chancellor Merz will speak at the general debate about the budget and announces a turnaround in the federal government's economic policy. He emphasizes that the foundation has been laid for further investments and that the mood in the country is improving. Merz also announced that Germany would once again assume leadership responsibility in Europe in terms of foreign policy. A central element of his speech is the pledge to support Ukraine in the fight against Russia. This is of great importance, especially in view of the current geopolitical challenges.
However, the opposition reacted critically to Merz's announcements and accused him of breaking his word again. The Green parliamentary group leader Dröge criticizes the fact that Merz promised a reduction in electricity taxes for everyone, but did not implement it. The AfD parliamentary group leader Weidel also expresses her opposition and explains that Merz is continuing the traffic light government's policy. What is particularly significant is her accusation that the “dismantling of the debt brake” is the Chancellor’s most blatant breach of word. In addition, Left Party leader Reichinnek emphasizes that the planned budget would widen the gap between rich and poor.
Social spending in Ukraine
The high social spending in Ukraine leads to financial obligations and risks. Effective social spending even amounts to almost 30 percent of GDP. Government spending in Ukraine exceeds 40 percent of GDP, which results in chronic problems in savings formation. One problem that will be of greater concern to Ukraine in the coming years is pension payments, which account for 15 to 17 percent of GDP and 55 to 70 percent of social spending. This is in contrast to comparable countries where pension payments only account for 30 to 50 percent of social spending.
Reforms and challenges
The need to reform pension payments and social spending is increasingly emphasized in Ukraine. The International Monetary Fund (IMF) is planning moderate cuts in social spending to around 21 percent of GDP by the end of 2016, with savings primarily in the area of pensions. However, political blockades and veto groups make social reforms difficult, making it difficult to implement such cuts.
In a global context in which Ukraine faces enormous challenges, the importance of sound fiscal policy becomes clear. As Germany seeks a turnaround in economic policy under Merz's leadership, Ukraine urgently needs to reform its fiscal policy structures to meet long-term financial obligations. Continued high inflation could further reduce real social spending and represents an additional risk.
Italian and other European social policies should also draw attention to these developments, as social challenges increasingly have an impact across national borders. Southern and Eastern Europe face similar financial challenges compounded by geopolitical instability.