German Chancellor Friedrich Merz faces mounting pressure to strengthen leadership within his coalition as business leaders warn of potential government collapse over stalled reforms.

German Chancellor Friedrich Merz is under fire from the Federation of Small and Medium Enterprises, which has urged him to assert stronger leadership to prevent cracks within his governing coalition. Christoph Ahlhaus, head of the federation, issued a stark warning that prolonged delays on critical reforms, including pension adjustments and healthcare changes, are eroding public and economic trust in government stability.

The coalition’s tensions have intensified following months of controversy, including policy disputes and internal criticism of Merz’s personnel decisions. As the summer recess ends, calls for decisive action are amplifying, with Ahlhaus stressing that continued indecision risks fracturing the coalition. He criticized frequent public announcements of reform proposals without unified agreement, labeling the lack of coordination as damaging to both credibility and morale.

The pressure comes at a pivotal moment for Merz, as his leadership trajectory hinges on his ability to restore confidence and deliver concrete progress. Key meetings, including a session with his party’s leadership and a cabinet retreat, are set this week. The stakes are further raised by looming state elections, particularly in Saxony-Anhalt, where the growing influence of the far-right Alternative for Germany party poses a threat to traditional coalitions. A failure to regain momentum could endanger both the coalition’s future and Merz’s political tenure.