Merz Warns of Strain on Germany’s Welfare System

(MENAFN) German Chancellor Friedrich Merz has issued a stark warning about the long-term viability of the country’s social support system, highlighting growing fiscal pressures.

In a speech delivered on Saturday to fellow members of the Christian Democratic Union (CDU) in Osnabrueck—a city located in Lower Saxony and known for housing the automaker Volkswagen—Merz expressed deep concerns regarding the current state of public welfare.

“The welfare state as we have it today can no longer be financed with what we can economically afford,” Merz stated, urging a major reevaluation of Germany’s benefits framework.

He revealed that last year’s social spending reached an all-time high of €47 billion ($55 billion), and warned that this figure continues to rise in 2025.

Expenditures on welfare have surged significantly, with projections indicating further increases due to demographic shifts and a growing unemployment rate.

Germany offers extensive assistance programs, including subsidies for housing, children, and the unemployed, as well as allowances for families and care services for both the elderly and the ill.

However, with the economy remaining stagnant this year amid a mix of long-term and short-term challenges, pressure on the welfare system is intensifying.

While the majority of recipients are German nationals, Merz acknowledged that a notable portion consists of foreign residents.

During the same address, Merz described the situation as a “structural crisis,” emphasizing that the challenges facing the country are deeper than a simple economic downturn.

He admitted that revitalizing Germany’s economy has proven more complicated than he had initially believed.

Once regarded as the EU’s primary economic engine, Germany has seen a marked slowdown since 2017.

The country’s gross domestic product has only expanded by 1.6%, compared to a 9.5% increase across the rest of the Eurozone.

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