Overview
- The coalition leaders met at the Kanzleramt on Wednesday and say they may present a multi-point reform package this week after intensive preparatory talks produced roughly 30 agreed steps.
- The biggest item is an income-tax relief aimed at small and middle earners to take effect on 1 January 2027 with the SPD backing higher top and inheritance taxes to pay for it and the Union firmly opposing tax hikes.
- Working-time rules remain a central sticking point because the SPD proposes longer hours only by collective agreement while the Union and employers reject changes and unions warn this could weaken the eight-hour day.
- Health-insurance reform is the furthest advanced element with plans to prevent further contribution rises, while long-term care financing and the scale of health spending cuts are still hotly disputed across the coalition.
- The pact would fast-track pension changes recommended by the pension commission with laws to be drafted by year-end and could ease household spending and spur business investment if leaders bridge financing and labour disputes before the summer recess.