Germany Weighs €3 Billion in Subsidy Cuts to Ease Budget Strain

Chancellor Friedrich Merz’s coalition agreed to scale back subsides worth about €3 billion ($3.5 billion) to create fiscal space for tax relief for lower-income households, according to people familiar with the discussions.

The chancellor’s Christian Democratic-led bloc and the center-left Social Democrats discussed the contentious issue at a six-hour meeting on Tuesday as they sought to revive fading public support, the people said. Merz and SPD co-lead Lars Klingbeil, the finance minister, arrived at an agreement to reduce a range of financial aid programs and tax breaks.

Measures under consideration include tax incentives for company cars, dentists ...