Merz promises to relieve local governments of debt in preparation for election challenges.

German Chancellor Merkel announced on Saturday that the federal government will start helping local governments repay old debts starting from January 1, 2026. Two weeks later, her government will face its first electoral test since taking office. Merkel made this pledge at the party conference of the Christian Democratic Union in North Rhine-Westphalia. The state will hold local elections on September 14, and Merkel's government has been in power for four months. Leaders of German states and local governments have stated that the federal government has allocated additional welfare spending costs to local governments without providing corresponding financial support. Merkel said, "We will submit a draft bill on old debts of local governments later this year, with plans for it to officially take effect on January 1, 2026."