Germany’s Merz: State Cannot Protect Citizens or Businesses From All Market Fluctuations

Friedrich Merz asserts that the state cannot shield citizens or businesses from all market fluctuations.
The German government focuses on structural reforms and infrastructure investment to bolster resilience.
Market volatility is expected to persist amid energy cost pressures and global trade uncertainties.

Germany’s Merz: State Cannot Protect Citizens or Businesses From All Market Fluctuations

Friedrich Merz, chairman of the CDU, made headlines on Thursday with a stark assessment of the limits of state intervention in the face of market volatility. Speaking at an economic forum in Berlin, Merz argued that while the government can mitigate some risks, it cannot insulate individuals or companies from every price swing or downturn. “The state cannot protect citizens, nor can it protect businesses, from all market fluctuations,” he said. “What we can do is create the framework for resilience: competitive energy costs, modern infrastructure, and reliable regulation.”

The remarks come as Germany grapples with lingering energy price shocks, weak industrial output, and a mood of uncertainty among its Mittelstand. According to people familiar with the matter, Merz’s comments reflect a broader coalition consensus that fiscal measures—including a proposed €50 billion infrastructure fund—should focus on long-term competitiveness rather than short-term price controls. The government has already rolled out limited energy relief, but officials say further blanket subsidies are off the table.

Market reaction was muted, with the DAX edging down 0.3% in afternoon trading. Analysts noted that Merz’s stance aligns with the ECB’s cautious line on wage-price spirals. “Investors are already pricing in a higher tolerance for volatility from Berlin,” said a Frankfurt-based economist. “The real test will be whether the promised structural reforms materialize before the next downturn.”

Without a comprehensive deal on industrial support, some sectors face headwinds. Energy-intensive firms, in particular, have warned they may shift production abroad. “We’ve tried to reach the Economics Ministry for comment, but calls weren’t returned,” a spokesperson for a chemical industry lobby said.

Correction: An earlier version of this article misstated the date of Merz’s speech. It was delivered on Thursday, not Wednesday.