Friedrich Merz, the chancellor candidate for the conservative Christian Democratic Union, acknowledged the need for a “major effort” to revive the economy as his party pledges to return German growth to 2 percent over the next five years through changes to the welfare and tax systems.

The German economy shrank for the second straight year in 2024 as worried consumers held back on spending and Chinese competition ate into the country’s traditional exports of cars and industrial machinery.

Germany’s economy shrank for a second consecutive year in 2024 and is unlikely to grow much in 2025, laying bare the challenge for the country’s new government once snap elections are held in February.