The Chancellor is challenging tradition: Germany is preparing for a social turnaround
25 August 18:34
German Chancellor Friedrich Merz has made a high-profile statement that the country’s current social welfare system is no longer financially viable. During the party conference of the Christian Democratic Union in Lower Saxony, he called for a fundamental revision of the social benefits model, which, in his words, “exceed what the economy can afford.” This was reported by The Telegraph, according to "Komersant Ukrainian".
Economic context
The German economy is going through a difficult time: since 2017, its growth rate has slowed sharply, and in 2023-2024, the country’s GDP declined twice in a row – by 0.3% and 0.2%, respectively. In the second quarter of 2025, the decline continued by another 0.3%. Industrial production is also showing a decline, which puts additional pressure on the budget.
Social spending is at a record high
In 2024, social security spending reached a record €47 billion and continues to grow. The reasons for this are an aging population, rising unemployment, and an increase in the number of welfare recipients, including foreigners, including Ukrainian refugees.
What does the social security system include?
Germany provides a wide range of social support:
- Unemployment benefits (Bürgergeld)
- Housing subsidies
- Child benefits and family allowances
- Care programs for the sick and elderly
- Benefits for the poor
Impact on Ukrainian refugees
The government plans to cut monthly payments for newly arrived Ukrainian refugees by about €100 per person. This decision has sparked debate among coalition partners, particularly the Social Democrats, who are in favor of maintaining humanitarian support.
Political tensions
Merz called for joint action in the coalition, emphasizing that raising taxes on medium-sized businesses is not the answer. His position contradicts the statements of Vice Chancellor Lars Klingbeil, who admits the possibility of increasing the tax burden on the wealthy.
Merz’s statement could be a turning point in German social policy, particularly in supporting refugees and the poor.
