Key points from the coalition agreement in Germany:

• Friedrich Merz's conservatives and the Social Democrats (SPD) finalize a coalition deal.
• The agreement aims to revive a faltering economy and enhance defence spending.
• Merz emphasizes the need for a quick response to global trade tensions, especially from the U.S.
• A recent Ipsos poll shows growing popularity for the far-right Alternative for Germany (AfD).

Germany's conservative leader Friedrich Merz has formally sealed a coalition agreement with the Social Democrats (SPD) aimed at steering the nation through a period of economic uncertainty and rising global tensions. Following his party's electoral victory earlier this year, Merz has faced intense pressure to establish a functioning government as economic conditions deteriorate, exacerbated by U.S. President Donald Trump’s trade tariffs that have heightened the risk of a recession.

In discussions preceding the formal announcement, Merz stated, “Germany is back on track,” indicating his administration's commitment to bolster both economic competitiveness and national security. The coalition deal is seen as critical in that it promises a boost in defence spending, a response to Europe’s security concerns given the aggressive stance of Russia and ongoing support for Ukraine amidst its conflict with Russia.

The coalition, outlined in a 144-page document, emphasizes the urgency of policy adaptations in the wake of escalating global challenges. It includes significant plans for substantial investment in infrastructure and a reform of welfare systems, addressing the crippling high costs faced by households and businesses alike. As reported by BBC, the duo aims to maneuver away from Merkel-era leniencies towards stricter migration policies.

Merz also conveyed a collaborative intent with the European Union while striving to maintain vital ties with the United States. The coalition deal has however stirred discontent among the far-right Alternative for Germany (AfD), which has gained traction and recently topped polls with 25% support, a clear indication of a rising challenge for Merz’s CDU which trails closely at 24%. The alliance has promised to address immigration reform by imposing stricter border controls to stem the flow of asylum seekers.

Although the coalition’s details are promising, approval from both parties will still be required before the government can be formally installed. Following comprehensive discussions with SPD leadership, Merz stated that he anticipates a positive reception from party voters, reassuring them that “Germany’s challenges will not dictate our path.” The coalition agreement is also seen as essential for providing stability during a period of potent international instability.

As Merz prepares to assume the chancellorship, he is confronted with not only the immediate task of economic recovery but also an electorate increasingly anxious about national and global security dynamics.

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