Germany’s Coalition Hosts Crisis Summit as Polls Show Centre Parties Sinking, Far Right Leading

German coalition leaders meet employers and unions to tackle tax, labor, and pension reforms as AfD surges to 29% in polls and industrial orders fall 3.8%, but quick fixes are unlikely.

Top officials from Germany’s governing coalition will meet Wednesday evening with employer associations and union leaders at the Chancellery, as the centre-left and centre-right struggle to reverse a slide in public confidence that has pushed the far-right AfD to first place in national polls.

The three-hour session—described by government spokesman Kornelius as an informal exchange rather than a formal coalition committee—is designed to identify common ground on tax policy, labour market reforms, pension adjustments and bureaucratic simplification. Chancellor Merz expressed optimism at a CDU state party conference on June 6, setting a target of delivering a reform package by the start of the parliamentary summer recess on July 10. A separate summit of the coalition committee is expected in late June or early July.

But the political arithmetic is daunting. Current surveys place the Union (CDU/CSU) at 21 percent and the SPD at just 12 percent, while the AfD leads with 29 percent. The economic backdrop is equally grim: industrial orders unexpectedly fell 3.8 percent in April, and there is growing concern among industry insiders that the stagnation of the second quarter could tip into outright recession.

Employers demand action on costs

The main business lobby groups—BDA, BDI, DIHK and ZDH—are pressing for a unified reform course. Handwerkspräsident Dittrich called for a comprehensive package to restore competitiveness, while the HDE retail association urged the government to focus on rising labour expenses. According to the Oldenburg Chamber of Industry and Commerce, some German companies pay up to five times more for electricity than their international rivals.

A special DIHK analysis warns that the crisis has now spread to the services sector. Only 27 percent of surveyed companies still rate their business situation as good.

Unions push back

DGB chairwoman Fahimi sharply criticised the reform agenda. She rejected any consideration of loosening Germany’s working-hours law and instead demanded relief for companies that invest. The DGB plans to present its own growth proposals. IG BCE chief Vassiliadis complained that there have been almost no substantive talks between employers and unions so far.

Low expectations for concrete outcomes

Neither party expects immediate results. CDU Secretary-General Linnemann said the priority is to “stay in dialogue,” while SPD Secretary-General Klüssendorf acknowledged that no concrete measures would be adopted at this meeting. With the summer break fast approaching and the political calendar crowded, the pressure to deliver remains intense—even if quick fixes appear out of reach.