The Economy
Germany's economy has become a problem child. For the first time since the 1950s, the country's gross national product, the economic engine of Europe, has shrunk for two years in a row. High energy prices, rising unemployment, a lack of skilled labor, a lack of investment willingness, and extensive bureaucracy are some of the problems that Merz now needs to address.
The country has long taken pride in being the "Export World Champion", which has been made possible, among other things, by the import of cheap Russian gas. The Ukraine war and the transition to a green economy have fundamentally changed the conditions, which has hit the heavy automotive industry and exports hard.
Security Policy
The USA's dramatic shift in foreign policy since Donald Trump came to power has caught Europe off guard. Merz launched a harsh attack on Trump and Elon Musk on election night. He said, among other things, that the USA "does not care about Europe's fate at all" and that the country, in its "shameless" attempts to influence elections, is no better than Russia.
Many analysts estimate that Europe needs to invest hundreds of billions of euros in upgrading its military capabilities in the coming years, with Germany expected to bear a large part of the burden. The question is where the money will come from. So far, Merz has consistently rejected joint EU loans to finance arms purchases, but has expressed himself somewhat more vaguely about easing the famous German debt brake for such investments.
Migration
A long series of terrorist attacks and violent crimes committed by asylum seekers or recently granted asylum in Germany has sparked a heated debate. Merz has promised to stop illegal immigration, including through permanent border controls.
The challenges with this are several. Merz needs to get his future coalition partner on board, and there is a discussion about whether the plan is legally and practically feasible.
The Climate
Environmental and climate issues have been completely overshadowed in the election campaign, which has been dominated by security issues and the economy. Germany's greenhouse gas emissions have decreased, and the expansion of solar energy and wind power is moving forward. However, to reach the emission targets for 2030, the next government may need to take a closer look at the construction sector and traffic.
Digitalization
Around 80 percent of German companies still use fax. In the public sector, investments in digitalization have been made, and for those visiting Berlin or another major German city, it is now largely possible to get by without cash, something that was unthinkable just a few years ago. But more needs to be done.
