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Friedrich Merz’s political woes have plunged the EU agenda into doubt as Brussels braces for months of uncertainty over the fate of the German chancellor.
The most immediate concern is the bloc’s proposed €2tn budget, a seven-year agreement that will force difficult choices on everything from defence to farm subsidies. Without Germany, the EU’s biggest member state, firmly behind the compromise — and ideally helping to steer it — a deal by year-end becomes much harder.
Four officials involved in the talks said heavy losses for Merz’s Christian Democrats in recent regional elections had forced the EU to reassess what it could achieve in the coming months.
Merz “is in big trouble and that obviously has a big impact” on what EU leaders can agree on, said a senior EU official. “When you’re faced with the choice of a very weak German chancellor or a brand-new German chancellor, there are no good options.”
When confronted with questions about his political future last week, Merz said he had vital tasks to get on with, including EU budget negotiations. He said he was “intensively discussing” how to handle the budget for areas such as competitiveness, defence and resilience.
Merz has insisted that he wants to stay on as chancellor and leader of his Christian Democrats in the wake of punishing results in two eastern German states. In Saxony-Anhalt, the far-right Alternative for Germany came first in a vote earlier this month and is now seeking to form a regional government for the first time.
In elections in Mecklenburg-Vorpommern on Sunday, the CDU fell below the 5 per cent threshold for being elected to a state parliament for the first time in the party’s 81-year history.
With France facing the prospect of a far-right Eurosceptic president after elections in April, and similar parties gaining ground before parliamentary elections in Italy, Spain and Poland, EU leaders have warned that failure to agree the 2028-34 budget by the end of December could leave the bloc without a deal before payments are due to begin in January 2028.
“No matter who’s in power [in Germany or elsewhere], if we don’t have agreement by the end of this year, we would be really disappointing for [EU budget] beneficiaries from the 1st of January 2028, which will really impact the credibility of the European Union,” said Thomas Byrne, Ireland’s EU affairs minister.
Beyond the budget, Brussels is also grappling with how to respond to China’s trade threat to the EU economy, ease the burden of climate rules on struggling businesses and maintain support for Ukraine.
One senior European diplomat said that Germany’s role traditionally was to sense “the moment when it is right for us to step in and grease the wheels of the machine when they are jammed”, adding, “And now it is clear that Merz cannot do that.”
Another senior EU official said that Merz’s “collapse has been so fast” there was “nobody who thinks he can rescue this”. In practice, the official added, this meant Merz could no longer “play the role that a German chancellor is supposed to play”.
The German chancellor has led a group of fiscally prudent countries that are pushing for “several hundred billion” in cuts to the European Commission’s opening proposal of a €2tn budget.
Officials warned that either Merz would be severely weakened and thus unable to take bold decisions, or that his replacement would come with a new team and new approach, and take months to settle in before being able to exert their influence.
“I don’t think we will see more flexibility on the German side any time soon,” said a third EU official, referring to the EU budget and other economic policies.
Additional reporting by Laura Pitel in Berlin
