What Germany’s Election Result Means for Its Economy

Friedrich Merz and his center-right Christian Democrats emerged victorious in Germany’s election on Sunday, but the celebrations may be short. The next government, almost certainly led by Mr. Merz as chancellor, faces a stagnant economy, President Trump’s threat to put tariffs on the country’s crucial export industries and a fourth year of war in Ukraine.

What’s more, the ability to address these issues is hamstrung by strict limits on government debt and deficits, making it difficult to finance higher military spending, update crumbling infrastructure and carry out other initiatives that economists say are crucial to spur growth.

A dispute over this rule, known as the debt brake, brought down the government of Chancellor Olaf Scholz of the center-left Social Democrats, paving the way for Sunday’s early election. But relaxing the rule would require a two-thirds majority in Parliament to amend the Constitution, and the election outcome suggests it would be difficult to muster that much support.

Already on Monday, Mr. Merz was facing calls from other politicians, economists and even the traditionally conservative central bank for the new government to find a way to adjust the spending limits to fit the country’s urgent economic demands.

“In principle,” the Bundesbank wrote in a report on Monday, “it is entirely justifiable to adapt the debt brake’s borrowing limit to changing conditions when the public debt ratio is low.” German government debt is just over 60 percent of gross domestic product, far lower than in countries like Britain, France and the United States, where debt is near or above 100 percent of G.D.P.

But after Sunday’s election, the two-party coalition that Mr. Merz hopes to form between his Christian Democrats, which won 208 seats, and the Social Democrats, with 120, will have to rely on other parties to achieve the two-thirds majority in Parliament necessary to change the Constitution.