San Francisco Frontiers - German business groups pressure Merz over ailing economy

Merz has made boosting Europe's biggest economy a priority but critics charge that, after four months in power, his government is moving too slowly and not living up to its promises of reform.

During a meeting Monday with leaders of Germany's four top business associations, Merz faced a dressing-down for failing to take strong action in areas ranging from welfare reform to tackling onerous red tape, tabloid Bild reported.

None of the groups present commented on the details of the meeting, which took place behind closed doors.

A spokeswoman for leading industry federation the BDI told AFP that the aim of the talks was to "demonstrate the urgency" of the situation facing Germany.

Hammered by a manufacturing slump and weak demand for its exports, Germany's economy shrank for the past two years and has failed to rebound strongly in 2025 with US President Donald Trump's tariffs adding to headwinds.

The criticism at Tuesday's tense meeting was wide-ranging, Bild reported.

The German Chamber of Commerce and Industry urged the government to speed up planning for large projects while the BDA employers' federation called for rapid reform of health insurance systems to stop fast-rising contributions, it said.

The BDI reportedly pressured Merz to fight for German interests in Brussels while the ZDH group representing the skilled crafts sector urged measures to lessen the burden on small- and medium-sized companies that form the backbone of the economy.

Merz was surprised by the intense criticism and urged patience, saying the government needed time to enact reforms, Bild said.

Presenting the 2026 budget plans to parliament Tuesday, Finance Minister Lars Klingbeil pledged far-reaching reforms to get the economy moving again.

"Anyone who believes we can simply continue as before is mistaken," Klingbeil said. "There must be changes, and these cannot be small steps, but rather major changes."

J.Peterson--SFF