By Stephanie Halasz and Sophie Tanno

(CNN) — German Chancellor-in-waiting Friedrich Merz has unveiled a new coalition deal between the country’s two major centrist parties in a bold and optimistic speech in Berlin on Wednesday, hours after it was announced that an agreement to form a new government had been reached.

Pressure was on between the center-right Christian Democratic Union (CDU) and the center-left Social Democratic Party (SPD) to reach an agreement as Europe’s largest economy teeters on the brink of recession after sweeping tariffs imposed by the Trump administration caused global turmoil.

The deal was presented by Merz, leader of the CDU, which emerged as winner in February’s federal election. Also present at the news conference was leader of the CDU’s Bavarian sister party Christian Social Union (CSU), Markus Soeder, and co-leaders of the center-left Social Democratic party (SPD) Saskia Esken and Lars Klingbeil.

Speaking during a news conference, Merz laid out a vision of a Germany restored to its former strength and reliability. “The future government, the future coalition, will reform and invest to keep Germany stable, make it more secure and make it economically stronger again,” he said. He added that Europe would be able to “rely” on Germany.

Merz continued that the coalition negotiations had been carried out “in a situation of growing political tensions around the world,” and at a time when many outside forces are working not with Germany, but against it.

“The war in Ukraine continues unabated, the Russian aggressor (President Vladimir) Putin is showing no willingness to end the war and silence the weapons, and at the same time the economic uncertainties are increasing enormously – just this week decisions by the American government have triggered new turbulence, we can observe the reactions in real time, so to speak,” he said, referring to Trump’s widereaching tariff announcement.

Unveiling the details of the agreement, Merz said the new coalition would lengthen the amount of time it takes to obtain German citizenship to at least five years — up from a minimum of three years previously.

He also spoke of a need to improve Germany’s foreign and domestic security policies, including dramatically increasing Germany’s defense spending and creating a Swedish-style voluntary military service scheme.

Chancellor-in-waiting Friedrich Merz’s CDU party emerged victorious in February’s vote but failed to win a majority, with the far-right Alternative for Germany (AfD) surging into second place and almost doubling its supporter base.

Since then, the CDU/CSU have for weeks been locked in formal coalition talks with the SPD – Germany’s other main centrist party, which came in third in the vote and had led a three-way coalition government until its collapse in November 2024.

Pressure in Berlin to reach a deal had only mounted in the face of wider uncertainty, including the Trump administration’s introduction of sweeping import tariffs that have reshaped global trade. Merz has promised to revive Europe’s largest economy if he becomes chancellor, after years of uncharacteristic stagnation.

Continued mounting support for the AfD since the election also infused the talks with a sense of urgency. An Ipsos poll released Wednesday showed the far-right coming out on top for the first time, landing on 25%, ahead of the CDU on 24%.

“For the first time in the still-young history of the AfD, we are the strongest force in Germany. Thank you for your tremendous trust - the political change will come!” AfD co-leader Alice Weidel wrote in a post on X alongside the poll’s findings.

Merz has also pledged to boost the country’s defense spending, as Europe grapples with the threat from Russia and the US adopting a more hostile stance to European security. Berlin has reformed its so-called “debt brake” in order to loosen borrowing limits and allow for new investments in defense.

Merz has vowed to significantly tighten Germany’s immigration policies following a series of attacks perpetrated by migrants that catapulted the issue to the forefront of the 2025 election.

The-CNN-Wire
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