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Germany Coalition Unveils Welfare Overhaul, Aktivrente and Infrastructure Push, Leaves 2035 Engine Ban Unresolved

Law drafting now moves ahead, with a decision on the EU’s 2035 combustion‑engine phase‑out still pending.

Nach dem Koalitionsausschuss geben Markus Söder (l-r), Ministerpräsident von Bayern und Vorsitzender der CSU, Friedrich Merz, Bundeskanzler und Bundesvorsitzender der CDU, Bärbel Bas, Bundesministerin für Arbeit und Soziales und Bundesvorsitzende der SPD, und Lars Klingbeil, Bundesminister der Finanzen und Bundesvorsitzender der SPD zur Bekanntgabe von Ergebnissen im Bundeskanzleramt eine Pressekonferenz.
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Overview

  • Bürgergeld will be replaced by a new Grundsicherung that tightens obligations, including a 30% cut after a second missed Jobcenter appointment and a full benefit stop after a third, with hardship exemptions for health‑related cases.
  • The Aktivrente would allow retirees to earn up to €2,000 per month tax‑free from 1 January 2026, with cabinet approval targeted for next week and application via payroll without a progression charge; it applies to regular employment, excluding the self‑employed.
  • Infrastructure plans reallocate about €3 billion from the special fund to road construction for 2026–2029 under the pledge that all ready‑to‑build projects proceed, alongside continued focus on modernization.
  • A new, targeted electric‑vehicle incentive will focus on low‑ and middle‑income households, drawing on the EU Social Climate Fund plus €3 billion from Germany’s Climate and Transformation Fund through 2029.
  • After an eight‑to‑nine‑hour Koalitionsausschuss, leaders said legislative work starts immediately on the agreed measures, while the government’s stance on the EU’s 2035 engine rule was deferred for further consultation, including an auto summit.