Analysis of the First Year of the Merz Government and German Economic Problems

May 11, 2026, 08:37
EuropePolitics

Introduction

The first year of Chancellor Friedrich Merz's leadership has shown a clear difference between what businesses expected at the start and the actual economic data we see today.

Main Body

Friedrich Merz became Chancellor in May 2025 with a promise to create an 'economic turning point,' using his experience as a former leader at BlackRock. His main goal was to increase economic competitiveness and move away from left-wing policies. However, over the last twelve months, the government has failed to introduce the structural changes that businesses expected. The Federation of German Industries emphasized that the lack of a clear growth plan is a serious threat to Germany's industry, while other business leaders argued that too much bureaucracy is stopping innovation. This internal stagnation is made worse by global political instability. According to data from the ifo Institute, business confidence has dropped in all sectors, mainly due to the conflict in Iran and instability in the Middle East. These events have caused supply chain problems because of the blockade of the Strait of Hormuz, leading to higher oil prices and inflation. Consequently, the number of companies going bankrupt has reached the highest level since the financial crisis, and economic confidence is at its lowest point since 2020. Furthermore, disagreements within the governing coalition make it difficult for the administration to pass reforms. There is a strong ideological conflict between the CDU/CSU and the SPD regarding whether to prioritize wealth creation or social welfare. Despite these tensions and a drop in public support, Chancellor Merz has asserted that the current coalition is the only possible way to govern and has clearly rejected the idea of holding early elections.

Conclusion

Germany is currently experiencing economic stagnation and a loss of industrial confidence, yet the government remains committed to its current coalition despite heavy internal and external pressure.

Learning

πŸš€ The 'Logic Jump': Moving from Simple to Complex Connections

At the A2 level, you usually connect ideas with and, but, or because. To reach B2, you need Logical Connectorsβ€”words that act like bridges to show cause, result, and contrast without sounding like a beginner.

πŸ” The 'B2 Upgrade' from the Text

Look at how the article connects ideas. Instead of using simple words, it uses "Professional Bridges":

  • Instead of "So..." β†’\rightarrow Consequently

    • A2 Style: Oil prices went up, so more companies went bankrupt.
    • B2 Style: Oil prices rose; consequently, the number of companies going bankrupt reached a record high.

  • Instead of "Also..." β†’\rightarrow Furthermore

    • A2 Style: There are supply problems. Also, the government is fighting.
    • B2 Style: There are supply chain problems; furthermore, disagreements within the coalition make reforms difficult.

  • Instead of "But..." β†’\rightarrow Despite

    • A2 Style: There is a lot of pressure, but Merz will not change the government.
    • B2 Style: Despite heavy internal and external pressure, the government remains committed to the coalition.

πŸ› οΈ How to use these today

To sound more like a B2 speaker, stop starting your sentences with But or So. Try this pattern:

[Fact A] β†’\rightarrow [Professional Bridge] β†’\rightarrow [Result/Addition B]

Example: "I studied for five hours; consequently, I feel confident about the exam."

πŸ’‘ Quick Vocabulary Shift

Notice the phrase "made worse by." An A2 student says: "The problem is bigger because of the war." A B2 student says: "The stagnation is made worse by global instability."

Using "made worse by" allows you to describe a situation that is evolving, which is a key requirement for B2 fluency.

Vocabulary Learning

bureaucracy (n.)
Excessive administrative procedures that slow down processes.
Example:The new regulations added more bureaucracy, making it harder for small businesses to get permits.
stagnation (n.)
A period of little or no growth.
Example:The economy entered a period of stagnation after the recession.
instability (n.)
Lack of steady or predictable state, especially in politics or economy.
Example:Political instability in the region caused many investors to withdraw.
blockade (n.)
A military or political action that prevents the movement of goods or people.
Example:The blockade of the Strait of Hormuz disrupted oil shipments.
inflation (n.)
The general rise in prices of goods and services.
Example:Inflation has reached a five-year high, eroding consumers' purchasing power.
bankrupt (adj./v.)
Unable to pay debts; to declare insolvency.
Example:Many companies went bankrupt after the crisis.
coalition (n.)
An alliance of parties or groups working together.
Example:The coalition government struggled to pass reforms.
ideological (adj.)
Relating to ideas about how society should be organized.
Example:The ideological conflict between parties delayed decision-making.
confidence (n.)
Belief in oneself or in the success of something.
Example:Business confidence fell sharply after the trade war.
crisis (n.)
A time of intense difficulty or danger.
Example:The financial crisis led to widespread unemployment.