Germany’s economic decline is no longer merely an economic story. It has become a political one. Chancellor Friedrich Merz has become the focal point of this broader crisis of governance and legitimacy.
For decades, Germany was regarded as the economic engine of Europe and, alongside France, a principal political architect of the European Union. Today, however, the country appears increasingly adrift. Economic stagnation, industrial decline, political fragmentation, and the rise of the far right have combined to produce a crisis shaking the foundations of the Federal Republic. To make matters worse, Germany failed to secure a temporary seat on the United Nations Security Council. Its unconditional support for Israel perpetrating the genocide in Gaza was reported as the main reason. So, Germany goes through a moral and identity crisis as well.
At the center of this storm stands Chancellor Friedrich Merz, whose government has become the most unpopular in modern German history.
The scale of the collapse is impressive. By May 2026, according to a Forsa poll for RTL/ntv, Merz’s approval ratings had fallen to 13 percent, while disapproval ranged from 76 to 87 percent. His CDU/CSU-SPD coalition performed worse, with approval ratings at 11 percent.
The crisis confronting the country is not simply a crisis of leadership. It is a structural crisis affecting the economic model, the party system, the social model, and the governing capacity of the Federal Republic itself
Yet Merz’s unpopularity is not the consequence of a single scandal or political mistake. Rather, it reflects a broader perception that Germany’s governing elites have lost the capacity to respond to the country’s structural challenges.
The German economy has struggled for several years, more specifically since the cutoff of cheap gas from Russia. Once celebrated for its industrial strength and export-driven model, Germany now faces slow growth, declining competitiveness, rising energy costs, and increasing competition from China. Economic forecasts continue to be revised downward – the latest was to 0.5% growth in 2026 – while deindustrialization has become a mainstream political concern.
The country remains heavily dependent on an economic model built during a different phase of globalization, which benefited from incredible advantages that equipped and modernized Eastern European economies after the fall of the Soviet Union with EU financing but is increasingly unsuited to contemporary geopolitical realities. No adjournment or trajectory correction seems to be possible to implement.
One year ago, Merz entered office promising economic renewal. He presented himself as a competent manager capable of restoring confidence and growth after years of uncertainty. Instead, many Germans see a widening gap between rhetoric and results. Inflation remains a concern, purchasing power is squeezed, and industrial sectors that once formed the backbone of the German economy struggle to adapt.
Manufacturing has been the cornerstone of the German economy. It reached its post-reunification peak in 1991, when manufacturing accounted for approximately 24.6% of GDP. Since then, the share has gradually declined. By 2017, it was 20.1%, and by 2024, the latest available World Bank data show manufacturing at about 18.0% of GDP. It is a high manufacturing share in the economy by European standards, but low by the German economic model.
Public frustration is reinforced by the perception that the government lacks a coherent strategy to address these long-term problems.
Critics increasingly describe Merz as a politician whose worldview remains anchored in past certainties. A former Goldman Sachs executive, he has prioritized fiscal discipline and budget consolidation at a time when many economists argue Germany requires large-scale investment and structural transformation. His opponents contend he continues to approach twenty-first-century challenges with policy instruments from the previous era.
Political leadership has proven to be an equally significant problem
The coalition between the CDU/CSU and the SPD was never built around a common political project. It emerged mainly as the only viable formula to exclude the far-right Alternative for Germany (AfD) from power. The result is a government marked by constant internal disputes over pensions, taxation, welfare, infrastructure, healthcare, and environmental policy. Ministers routinely contradict one another in public, while coalition partners often focus more on protecting their electoral bases than governing effectively.
In Germany’s political system, coalition tensions are not unusual. What is unusual is the chancellor’s apparent inability to impose discipline and arbitration. Traditionally, German chancellors have had enough authority to manage internal disagreements and preserve governmental coherence. Merz has struggled to do so. Increasingly, he appears less as the conductor of the coalition and more as one participant among many competing factions.
Communication failures have further damaged his standing
Several public controversies have reinforced an image of a leader disconnected from everyday concerns. Remarks suggesting that Germans do not work hard enough provoked significant backlash. Merz later acknowledged shortcomings in his communication strategy, admitting he failed to convince the public that his reforms were necessary.
The problem, however, goes beyond communication. Increasingly, voters appear unconvinced not simply by the messenger but by the message itself.
This growing disenchantment has created fertile ground for the rise of the AfD. Polls in May 2026 put the party at 28-29 percent nationally, ahead of the CDU/CSU in several surveys (22-24 percent). Once largely confined to eastern Germany, the AfD has expanded its appeal across broader segments of the electorate, attracting former non-voters, disillusioned SPD supporters, and parts of the conservative vote traditionally loyal to the CDU.
The rise of the AfD reflects more than protest voting. It signals a growing crisis of confidence in Germany’s established governing parties. As economic anxieties deepen and coalition paralysis continues, increasing numbers of voters appear willing to consider political alternatives that would have been unthinkable only a decade ago.
As the Alternative for Germany (AfD) continues to gain support in public opinion polls, segments of the German political establishment increasingly advocate legal measures to restrict the party. These measures included proposals in the Bundestag to initiate proceedings before the Constitutional Court to consider a complete ban of the party.
Efforts to contain the AfD have also expanded to the European level. In May 2026, the European Union authority responsible for overseeing political parties initiated proceedings against the Europe of Sovereign Nations (ESN), a European political party primarily led by the AfD. This action could result in the ESN’s deregistration and the subsequent loss of EU funding.
At the European level, Germany’s weakening position has become equally striking
For much of the post-war period, Berlin was both Europe’s economic center of gravity and a principal political decision-maker. Today, Germany’s influence appears diminished. European debates increasingly unfold without clear German leadership, while Merz is often portrayed as politically marginal in major strategic discussions.
His foreign policy has exposed additional contradictions. A committed Atlanticist, Merz has sought to maintain strong relations with Washington while preserving economic ties with China, reflecting German industry’s priorities. Yet the growing rivalry between the United States and China makes this balancing act difficult. The result is a foreign policy that often appears reactive rather than strategic and at odds with Trump.
These difficulties have generated growing speculation about Merz’s political future. In Berlin, rumors of a possible leadership change have intensified. Attention has focused on Hendrik Wüst, Minister-President of North Rhine-Westphalia, who many within the CDU view as a more popular and electorally viable figure. Although no formal challenge has emerged, discussions about succession reveal deep anxiety within the governing camp. Yet, replacing Merez would not necessarily solve Germany’s deeper problems.
Germany is going through an existential crisis
The crisis confronting the country is not simply a crisis of leadership. It is a structural crisis affecting the economic model, the party system, the social model, and the governing capacity of the Federal Republic itself. The traditional parties that dominated German politics for decades increasingly appear unable to formulate convincing responses to economic stagnation, geopolitical uncertainty, and social fragmentation. As these parties weaken, the AfD continues to benefit from the resulting vacuum.
In this sense, Friedrich Merz may be less the cause of Germany’s difficulties than their most visible symptom. His political collapse reflects a broader erosion of confidence in the institutions and governing coalitions that shaped post-war Germany. The country that once embodied European stability now faces a prolonged period of political uncertainty and, above all, a crisis of leadership and vision that also brings uncertainty over the future of Europe.
In sum, Merz is accelerating the collapse of what he is trying to save. He applies the short-termism of what worked before to a situation that has fundamentally changed. China’s long-term, civilizational planning system has a lot to teach Merz, Germany, and Europe. The question is: are they willing to learn and put their certainties on hold? Meanwhile, German companies, such as BMW, have also announced new IT and AI research centers in China, expanding their EV research, testing, software, battery, and digital development activities into the People’s Republic.
Ricardo Martins – Doctor of Sociology, specialist in European and international politics as well as geopolitics
