BERLIN, March 23 (Reuters) - The leaders of Germany's centre-left Social Democrats (SPD) said on Monday the party needed to push ahead with promised reforms to tax and social welfare following the "
Germany's Merz wants to push ahead reforms after state election shakes coalition
Chancellor Merz's Reform Agenda and Coalition Challenges
By James Mackenzie
BERLIN, March 23 (Reuters) - German Chancellor Friedrich Merz promised on Monday to move quickly with promised reforms to tax and social security after his conservative Christian Democrats beat his Social Democrat coalition partners in a weekend state election.
State Election Results and Political Impact
The vote in the western state of Rhineland-Palatinate saw Merz's CDU party replace the SPD that had held power in the state for 35 years, giving the chancellor a personal boost but plunging his coalition partners into crisis.
It was the second of five state elections Merz's struggling coalition must navigate this year and there was heavy pressure on the SPD leadership following a steady slide in approval ratings that has left the party in third place behind the far-right Alternative for Germany.
SPD's Response to Election Defeat
Merz said he recognised the difficulties the defeat created for the SPD but said it was important for the government to show that it was determined to carry on with reforms to restore Germany's flagging economy, which has only just emerged from two years of recession.
Merz has promised a major package of reforms covering tax, health and social welfare in coming months but has faced heavy criticism for the time it has taken his coalition to convert promises into legislation.
Merz's Commitment to Reform
"I want to say to the people of Germany that we are now taking this election result as an incentive," he told a news conference in Berlin. "I want us to move forward with the coalition, with the SPD."
PRESERVING INDUSTRY
He said German labour costs were too high and bureaucracy was too burdensome for individuals and businesses and the government needed to pursue policies "for employees, but also for small and medium-sized enterprises, to preserve the industrial heart of our economy."
SPD's Internal Debate and Reform Strategy
SPD leaders Lars Klingbeil, finance minister in Merz's coalition and Baerbel Bas, the labour minister, said there needed to be a "hard debate" in the wider party leadership about responsibility for the loss in Rhineland-Palatinate.
But they said the situation facing Germany was too serious for "self-lacerating" internal debates about personnel issues while a major package of reforms had to be agreed.
Next Steps for SPD and Coalition
Klingbeil, who called the result in Rhineland-Palatinate "catastrophic", said the unanimous view of the party's executive committee was that the best response was not "replacing individuals, but rather by setting a clear programmatic and strategic course."
He said the party leadership as well as SPD ministers, state premiers and other senior party figures will meet on Friday to discuss a package of reforms which would then be discussed with their coalition partners.
(Reporting by James Mackenzie; Editing by Andrew Cawthorne)
