Challenges for German parties to form a government

The Christian Democratic Union won Germany's snap election, and Friedrich Mertz, the leader of the conservative party, will be Germany's next chancellor.

Friedrich Mertz, the leader of the Christian Democratic Union and the winner of the German election, wants to form a government quickly to revive the country's declining economy, increase defense spending and deal with diplomatic challenges ranging from confronting the Trump administration to ending the war in Ukraine.

But Germany's conservatives need at least one coalition partner to form a government, and they are likely to face months of difficult negotiations before a stable government emerges.

Mertz's conservative bloc, with 208 seats, and the Social Democrats, led by outgoing Chancellor Olaf Schulz, with 120 seats, have a combined 328 seats, giving them a slim majority in the 630-seat parliament.

The Alternative for Germany (AfD), which came in second in the recent elections, could secure a solid majority for Mertz with 152 seats, but the conservatives and all other parties refuse to cooperate with the far-right party.

Political analysts expect a so-called grand coalition of the conservative bloc and the Social Democrats to form Germany's next government.

Where do the German parties differ?

Mertz has promised to introduce stricter border controls, even permanent border checks, and direct deportations of migrants at the border.

All of these are things the SPD opposes, saying they violate human rights and European law.

On economic and social policy, Mertz wants to scrap unemployment benefits introduced by the previous government, but the SPD sees a need for reform.

The conservatives want to cut corporate taxes, while the SPD wants high-income earners, including companies, to pay more.

Economy; the main challenge for the next government

The next German government will face a tough economic and reform agenda as the country navigates its most serious economic crisis since reunification in 1990.

Economists and business leaders are calling for a swift government formation and economic reform to address the growing challenges, and analysts warn that deep political divisions could complicate coalition talks.

Friedrich Mertz is facing Germany's biggest economic downturn since reunification, and the next government must address key issues including debt reform, modernizing transport infrastructure, digitizing public administration, increasing defense spending, advancing the energy transition and tackling rising prices.