After lengthy talks between Merz's Christian Democratic CDU and its coalition partner, the Social Democratic SPD, an agreement has been reached, Merz announced.
"We are working to reduce bureaucracy. We are working to protect our welfare state and we are working to ease the burden on employees and businesses by lowering taxes," he said at a press conference.
Income tax cuts worth 10 billion euros (around 110 billion SEK) will be financed through, among other things, higher taxes for the richest and changes to the pension system.
The government is keen to show that it can tackle the country's problems in order to reduce the appeal of the right-wing nationalist AfD.
