The leaders of Germany's ruling coalition parties are meeting on Wednesday for what could be decisive talks on their reform package, with tax relief for low and middle incomes, labour market reforms, pensions, health care and long-term care all on the agenda.
Whether decisions will be reached on Wednesday is unclear, but Chancellor Friedrich Merz is confident that progress will be made.
"My expectation is that we will truly take a giant leap forward in modernizing our country," Merz said before the top-level meeting between his conservative bloc - made up of the Christian Democratic Union (CDU) and its Bavarian sister party the Christian Social Union (CSU) - and its centre-left coalition partner, the Social Democrats (SPD).
"We will be discussing a whole series of proposals this afternoon; I hope we can finalize them by this evening - not too late," the chancellor added.
The coalition intends to present the results of the meeting on Thursday.
During days of preparatory talks, the coalition partners have already agreed on many measures. However, Merz stressed that some time would be needed to sufficiently discuss the necessary issues.
The reform package is regarded as the central domestic policy project of the CDU/CSU-SPD coalition. The aim is to revive the economy and make the social security systems fit for the future.
Pressure is high to reach an agreement, with industry representatives among those calling for a comprehensive package.
"The economic situation is too serious to waste any more time," said managing director of the Federation of German Industries Tanja Gönner.
A commission has already put forward proposals on pension reform that the coalition wants to implement as closely as possible. Both sides are expected to agree on a roadmap for this by the end of the year.
The savings programme for the statutory health insurance scheme is already going through parliament, though some issues still need to be resolved.
The reform of income tax is seen as the biggest sticking point, with Finance Minister Lars Klingbeil having put forward two proposals intended to form the basis for negotiations.
