Germany’s CSU backs coalition deal as economic gloom ups pressure for new government

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MUNICH, Germany (Reuters) – Germany’s conservative CSU approved a coalition deal with its CDU sister party and the Social Democrats (SPD) on Thursday, a day after they presented a programme to revive growth in Europe’s biggest economy and take a tougher line on migration.

The move by the Bavarian party is the first of several steps needed for chancellor-in-waiting Friedrich Merz of the CDU to form a new government by early May. Delegates or members of the other two parties are due to vote on the deal later in April.

Time is pressing with U.S. President Donald Trump’s announcements on tariffs and fears of a trade war causing global market turbulence and spelling doom for Germany’s export-oriented economy.

“The coalition agreement is designed to be a rehabilitation course and fitness programme for our country,” said CSU leader Markus Soeder, telling reporters the party’s executive and parliamentary group had unanimously adopted the programme.

Underscoring the challenges ahead, economic institutes gave a dismal outlook for this year, cutting German growth forecast to 0.1%.

The 144-page programme for government includes a reduction in corporation tax and lower energy prices. The parties also plan a commission on a reform of constitutionally enshrined borrowing rules, blamed by critics for stifling growth.

On migration, the three parties plan to turn away asylum seekers at German borders and scrap fast-tracked naturalisation.

The parties clinched a deal after weeks of haggling following a February election in which the conservatives won most votes but fell short of a majority. The far-right Alternative for Germany (AfD) came second.

Merz said on Wednesday a new government should be in place in the week after April 28.

(Reporting by Alexander Huebner; Writing by Madeline Chambers; Editing by Miranda Murray, William Maclean)