Germany's likely next chancellor casts doubt on coalition pledges

BERLIN (Reuters) - Germany's conservative chancellor-in-waiting has cast doubt on some of the commitments he had made to secure a coalition with the Social Democrats, hinting that his government might not deliver on promises of lower income tax cuts and minimum wage hikes.

Friedrich Merz, who won the February 23 national election, has seen his poll ratings slide following the coalition agreement he reached two weeks ago - the only two-way coalition available if he sticks to his pledge to keep the second-placed far-right Alternative for Germany out of power.

His hints, however, are likely to add to dissatisfaction in the SPD, whose 350,000 members must approve in a membership ballot the leadership's decision to place the old school conservative hard-liner in the German chancellery.

"We haven't agreed to that," he said of the SPD's assertion that the minimum wage would rise to 15 euros an hour by 2026 in an interview with the Bild am Sonntag newspaper. "We agreed that the minimum wage commission is thinking in that direction."

On plans for a low- and middle-income tax cut, he said: "That's not certain... We want to cut income taxes if the budget allows it."

Merz's party does not face a major election for almost a year, while the SPD membership ballot must be completed by the end of this month. His sagging popularity - the result of partly going back on campaign pledges not to borrow more - has propelled the far-right into first place in polls for the first time since World War Two.

His comments reflect the letter of the coalition agreement, and SPD co-leader Lars Klingbeil has also said that everything in it is conditional on public finances.

If the SPD membership agrees, the Bundestag will appoint Merz as chancellor on May 6. The loquacious 69-year-old, who has never held a government job, has a reputation for verbal gaffes that sometimes alienate supporters.

A poll this week found that almost two-thirds of voters thought Merz, who would take office at a time of unprecedented diplomatic and economic crisis, was unsuited for the job of chancellor, with even 28% of his own party's voters agreeing.

If the SPD rejected the coalition, Merz's party would have the choice of either seeking a different deal, perhaps with more concessions under a different leader, breaking the taboo against cooperating with the far right, or calling fresh elections.

(Reporting by Thomas Escritt; Editing by Marguerita Choy)

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