Overview

• Friedrich Merz's coalition negotiations with the SPD are progressing, with leaders expressing cautious optimism for a deal by the end of the week.
• Germany's main equity index dropped 10% following U.S. President Donald Trump's tariffs, adding urgency to the talks and highlighting the need to restore economic competitiveness.
• Merz faces growing internal criticism from his conservative base, including the CDU’s youth wing, over perceived concessions to the SPD and policy reversals on fiscal discipline.
• The far-right Alternative for Germany (AfD) has surged in polls, drawing level with Merz's CDU/CSU for the first time in post-war history, further complicating the political landscape.
• Merz’s approval ratings have fallen sharply, with only 25% of Germans expressing support, as he seeks to balance coalition demands with his party's agenda.