Germany is facing significant challenges on multiple fronts as it heads toward national elections, with rising rents, migration concerns, and deepening international trade relationships with countries like the UAE taking center stage. Friedrich Merz, the conservative frontrunner, is vocal about revamping economic policies amid public protests over migration control. Merz stated emphatically at the Christian Democratic party convention held Monday, "After three years of mainly green economic policy, we are now faced with the need to re-establish the market economy in our country." This clarion call for economic restoration resonates amid concerns about the country's rental crisis.
According to the Institute for Economic Research, the cost of living, particularly rent, has soared across Germany, with cities like Berlin witnessing substantial price hikes. The latest figures reveal the average rent for an 80-square-meter flat climbed to 1,002 euros as of late 2024, up from 890 euros just nine years prior. This increase has positioned Germany as the EU country with the highest proportion of renters—52.4 percent of the population—prompting urgent calls for political action as many tenants are now classified as "overburdened." A significant portion of income is spent on housing, with some reports indicating tenants now spend about 24.5 percent of their income on rent.
With growing pressure on politicians to tackle the rental crisis, various parties are making promises as elections approach. While Merz's CDU party suggests easing bureaucratic hurdles for housing development and advocating for tenant protections, the Social Democratic Party (SPD), which is polling low at around 15 percent, aims to boost funding for social housing and extend existing rent caps indefinitely. Meanwhile, the Greens have also expressed support for extending rent regulations, but the Alternative for Germany (AfD) party has taken a different approach, opposing rent control altogether and advocating for prioritizing housing for "native Germans."
Germany's historical position as one of the largest economies within Europe intertwines with its relationships outside the EU, especially with middle eastern nations. A recent meeting at the UAE-German Business Forum emphasized Germany's continuing economic partnership with the UAE, where non-oil trade has surged to $13.8 billion, up 5.4 percent compared to the previous year. The UAE's Dr. Thani Al Zeyoudi noted the importance of this partnership and the potential for collaboration on renewable energy and technological advancements.
HE Dr. Jörg Kukies, Germany’s Minister of Finance, reiterated this sentiment at the forum, stating, "The UAE, as a major gateway to regional and global markets, is a strategic partner for Germany." Discussion focused on targeting industries like clean energy and industrial technology, with emphasis placed on sustainability and innovation.
Despite political turmoil and rising cost of living issues, the trades and investments between these two nations suggest strength. The bilateral efforts undertaken are complemented by initiatives, including investment agreements from major German companies focusing on digital platforms and technology aimed to capture high-growth markets.
Germany must navigate these increasingly convoluted issues at home and abroad, attempting to balance demands for economic reform, governmental stability, and international cooperation. The challenges are vast, encompassing public discontent—from rising rents to migration policies—while seeking solidified alliances to bolster economic strength. Political candidates are presented with the task of delivering on these pressing issues as the electorate eyes the future.
Friedrich Merz's push for change may appeal to many voters frustrated by both the economic conditions and political decisions of the preceding years. The CDU's strong polling indicates potential shifts, but whether these proposed reforms can genuinely address the fundamental concerns surrounding housing and migration remains to be seen. The imminent elections could serve as a referendum not only on local policies but also on how Germany positions itself globally, particularly with trusted economic partners like the UAE.
With decisive actions required to tackle these multifaceted crises, the decisions made now will leave lasting impacts on Germany's social fabric and economic health. The path forward appears fraught with obstacles, yet it presents opportunities for political leaders to redefine their vision for Germany during this pivotal moment through tangible legislation addressing housing, migration, and international cooperation.