Merz government to be sworn in as Germany ends months of stalemate
Germany's parliament is set to elect conservative Friedrich Merz as its new Chancellor.
The 69-year old is promising to revitalize the country's flagging economy and boost its voice on the world stage.
It brings an end to Germany's recent political limbo after the last government collapsed.
But Merz takes office at a time of huge uncertainty abroad and a surging far-right at home.
"It's our historical duty to make this government a success," said the CDU leader on Monday, as he officially signed the coalition agreement.
Merz's supporters argue that what they see as good government can help address growing voter discontent.
"I think we really need to prove that we solve the problems, not in a radical way, just in a very responsible, visible, detailed way," says Mark Helfrich, a CDU member of the Bundestag.
But the CDU, CSU and SPD coalition have a narrow majority with 328 seats – just a dozen more than the minimum required.
In February's federal election, the CDU/CSU nudged up its support by just four points while coalition partner, the SPD, crashed to its worst post-war result.
Merz has promised to tighten immigration rules, invest in the nation's ailing infrastructure and rebuild ties with key European partners.
He already steered through a law to exempt defence and security from Germany's strict debt rules – knowing that in the new parliament he wouldn't be able to find the necessary majority to do so.
"A remarkable decision," says Claudia Major, a senior vice-president at the German Marshall Fund in Berlin.
But because support for the governing parties is relatively low, "Merz will need to convince the broader public of the necessity to spend more on defence".
Snapping at Merz's heels throughout this parliament will be the far-right Alternative für Deutschland (AfD), now the main opposition force in the Bundestag.
The AfD wants to close Germany's borders, deport migrants en masse, end weapons supplies to Ukraine and re-open ties with Putin's Russia.
Last week, the AfD was officially classed as an extremist organisation by domestic intelligence (BfV), re-igniting a debate about whether the party should be banned.
The AfD has now said it's suing the BfV, accusing it of an "abuse" of power.
And the designation was publicly denounced by senior figures in Donald Trump's US administration – including vice president JD Vance.
Managing relationships with Trump's White House will be another balancing act for Merz, a committed Atlanticist who raised eyebrows on election night when he declared Europe should "achieve independence from the USA".
Nevertheless, Merz's government will "invest a lot to keep the transatlantic relationship going" says the GMF's Claudia Major.
There's speculation he may even "go for golf" – a reference to seeking to woo golf-mad Trump by playing some holes out on the fairway.
But Merz's first trips abroad are set to be to Paris and Warsaw, relationships he claims suffered under Olaf Scholz.
It's "high time" to improve German-Polish relations, says Agnieszka Pomaska, a member of the Polish Sejm and member of Prime Minister Donald Tusk's Civic Platform party.
"We need to invest together in the army, in defence," says Pomaska, who says that Scholz's government was "politically weak" and "it's never easy to cooperate with a government that is simply weak".
"We didn't have this feeling that was very much present during previous years that Germany is one of the leaders in the European Union."
Germany defends AfD extremist classification after Rubio criticises 'tyranny in disguise'
German politics froze out the far right for years – is this about to change?
Germany is back, says Merz, after sealing government deal
Friedrich Merz: Risk-taker who flirted with far right
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Business Upturn
5 minutes ago
- Business Upturn
Illicit Cigarettes in European Union at Highest Level Since 2015, KPMG Study Shows
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Evidence shows that excessive tobacco control policies may be driving smokers to the black market. Philip Morris International Inc. (NYSE: PM) today issues an urgent call for effective policymaking to counter the growing threat of illicit trade in the EU. In 2024, 38.9 billion illicit cigarettes were consumed in the region—the highest level since 2015—accounting for 9.2% of total cigarette consumption, with governments losing as much as €14.9 billion in tax revenues at a time when many countries face intense economic pressures. PMI believes that exacerbating the issue are steep and abrupt tax increases, benefitting criminals who supply unregulated, untaxed and inferior products, including counterfeits, at a lower price. To combat this growing threat, PMI urges the adoption of evidence-based regulation with balanced and predictable taxation through tax calendars, continued public-private collaboration and enhanced support of regional and national law enforcement agencies, as criminal organizations dealing in illicit cigarettes have cemented their presence in higher-priced Western European countries. According to the 2024 KPMG study, commissioned by Philip Morris Products SA, a large number of counterfeit cigarettes were consumed in the EU in 2024: 15.3 billion, a 20.2% increase vs. 2023. Additionally, so-called 'illicit whites'—legally manufactured cigarettes smuggled across borders to countries where they have limited or no distribution—reached 8.2 billion. 'The illicit tobacco trade threatens the European economy, public health, security and social stability; today, higher-taxed and higher-priced markets such as France and the Netherlands are especially impacted by illegally imported and counterfeit goods,' said Christos Harpantidis, PMI's Senior Vice President, External Affairs. 'Its massive socioeconomic impact negatively affects tax collection, job creation, and legitimate businesses, the engine of our European economies. The availability of cheap, unregulated cigarettes in the underground economy also impairs efforts to reduce smoking rates and achieve a smoke-free future.' The 2024 KPMG report indicates the increase in illicit cigarette consumption was primarily driven by France and the Netherlands. The study points to an especially alarming situation in France, where 18.7 billion illicit cigarettes were consumed in 2024, almost 7.8 billion of which were counterfeits. In the Netherlands, illicit cigarette volumes increased drastically, by 1.1 billion—more than doubled in a year—reaching 17.9% of total consumption. Had these cigarettes been legally purchased, an additional €9.4 billion would have been raised in taxes in France and almost €900 million in the Netherlands. In contrast, countries such as Bulgaria, Greece, Italy and Portugal—and Ukraine, outside the EU—have made significant progress in curbing the illicit tobacco market. Greece, for instance, had a 6.2 ppt drop in illicit cigarette consumption in 2024, to 17.5%—the largest decrease the country has seen in a decade. 'Predictable tax regimes and robust support for local law enforcement actions have proven an effective policy recipe: We now know how to effectively counter the criminal entities that engage in the illicit manufacturing, distribution, and sale of consumer products. Other countries in the region should emulate that approach to get control over this dangerous trend,' said Massimo Andolina, PMI's President, Europe Region. 'This is the way forward if we are serious about defeating the illicit tobacco trade in our continent, which harms Europe's economies, undermines European competitiveness and growth, and opens the door to other criminal activities. Citizens cannot afford to be deprived of much-needed state revenues in this critical moment for Europe, which are being lost rather than applied to key issues such as defense, internal security, and social programs.' Illicit trade affects the whole of Europe Across the 38 European countries included in KPMG's study (the 27 EU member states, as well as Albania, Bosnia and Herzegovina, Kosovo, Moldova, Montenegro, North Macedonia, Norway, Serbia, Switzerland, Ukraine, and the United Kingdom), 52.2 billion illicit cigarettes were consumed in 2024, accounting for 10.0% of total consumption. Tax revenue losses amounted to an estimated €19.4 billion. Illicit cigarette volumes in the U.K. decreased by almost 0.8 billion in 2024, though illicit cigarettes as a share of total consumption remained stable. The U.K. is still the third-largest illicit market in Europe, with 5.9 billion illicit cigarettes consumed last year. Ukraine, in contrast,saw the largest decline in illicit consumption, with contraband and counterfeit volumes decreasing by 2.4 billion or 29% (vs. a 1.1 billion or 14% increase in 2023). This is the 19th consecutive year that KPMG has measured and reported on illicit cigarette consumption across Europe. Heated tobacco products For the first time, the KPMG study included in its scope the illicit consumption of heated tobacco products in selected European countries: the Czech Republic, Germany, Greece, Hungary, Italy, Lithuania, Poland, Romania, Spain, and the United Kingdom. The study reveals that contraband consumption stood at 0.4 billion sticks (the consumables used in heated tobacco devices) in 2024, representing 0.9% of total consumption. The highest contraband volumes were found in Germany (0.15 billion sticks) and Poland (0.08 billion), with the U.K. having the highest share (7.8%). To date, no counterfeit flows have been identified. 'Policymakers must recognize that repeating the policy mistakes that drive the illicit cigarette market when regulating smoke-free products—excessive and market-distorting taxation, extreme control measures such as bans, and inadequate law enforcement against illicit activities across the value chain—may and will lead to the same disaster we see today in the cigarette sector in countries adopting such policies, and that we are starting to see in countries banning the legal sale of smoke-free products,' said Andolina. — Illicit trade does not just affect the people who consume these products. 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PMI works closely with law enforcement agencies and other organizations worldwide to root out and shut down illegal activities, including counterfeiting and smuggling. A detailed overview of the results, country profiles and methodology of the KPMG study is available here. For more information about PMI's illicit trade prevention efforts, visit Note to editors Definitions of illicit cigarette categories, as detailed in the KPMG report: Counterfeit: 'Cigarettes that are illegally manufactured and sold by a party other than the original trademark owner.' Illicit whites: 'Cigarettes that are usually manufactured legally in one country/market but which the evidence suggests have been smuggled across-borders during their transit to the destination market under review where they have limited or no legal distribution and are sold without payment of tax.' C&C: 'Counterfeit and contraband, including illicit whites. Contraband refers to genuine products that have been either bought in a lower-tax country and which exceed legal border limits or acquired without taxes for export purposes to be illegally re-sold (for financial profit) in a higher priced market.' Other C&C: 'Other C&C comprises contraband which does not fall within the Illicit Whites definition. It is often Duty Paid product from both EU27 and non-EU27 countries. There may also be counterfeit of brands that are not trademark-owned by participant manufacturers.' Philip Morris International: A Global Smoke-Free Champion Philip Morris International is a leading international consumer goods company, actively delivering a smoke-free future and evolving its portfolio for the long term to include products outside of the tobacco and nicotine sector. The company's current product portfolio primarily consists of cigarettes and smoke-free products, including heat-not-burn, nicotine pouch, and e-vapor products. As of December 31, 2024, PMI's smoke-free products were available for sale in 95 markets, and PMI estimates they were used by 38.6 million adults around the world. The smoke-free business accounted for 42% of PMI's first-quarter 2025 total net revenues. Since 2008, PMI has invested over $14 billion to develop, scientifically substantiate, and commercialize innovative smoke-free products for adults who would otherwise continue to smoke, with the goal of completely ending the sale of cigarettes. This includes the building of world-class scientific assessment capabilities, notably in the areas of pre-clinical systems toxicology, clinical and behavioral research, as well as post-market studies. Following a robust science-based review, the U.S. Food and Drug Administration has authorized the marketing of Swedish Match's General snus and ZYN nicotine pouches and versions of PMI's IQOS devices and consumables – the first-ever such authorizations in their respective categories. Versions of IQOS devices and consumablesand General snus also obtained the first-ever Modified Risk Tobacco Product authorizations from the FDA. With a strong foundation and significant expertise in life sciences, PMI has a long-term ambition to expand into wellness and healthcare areas and aims to enhance life through the delivery of seamless health experiences. References to 'PMI', 'we', 'our', and 'us' mean Philip Morris International Inc., and its subsidiaries. For more information, please visit and View source version on Disclaimer: The above press release comes to you under an arrangement with Business Wire. Business Upturn takes no editorial responsibility for the same.
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CBS News
9 minutes ago
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