Berlin’s Merz says Iran war ‘is root cause’ of Germany’s current economic problems

Chancellor Friedrich Merz says Germany will slash fuel taxes as households struggle with the energy shock from the Middle East war, while warning the conflict will have long-lasting economic consequences.

The announcement comes after oil prices surged again following the collapse of US-Iran peace talks and US President Donald Trump’s decision to blockade the Strait of Hormuz.

Merz says the war “is the root cause of the problems we face in our own country,” and stresses Berlin is doing all it can to try to bring the conflict to an end.

Following talks between his CDU party and its coalition partners, Merz says his government has decided to cut the tax on petrol and diesel by around 17 euro cents ($0.19) for two months.

“This will very quickly improve the situation for drivers and businesses in the country, and above all for those who, mainly for professional reasons, spend a great deal of time on the road,” he tells a news conference in Berlin.

Fuel prices in Germany, like elsewhere, have jumped sharply since the outbreak of the US-Israeli war against Iran at the end of February.

“At the same time, we cannot offset every single outcome on the market with government funds… The state cannot absorb all uncertainties, not all risks, not all disruptions in global politics,” he says.

Merz warns the war’s effects were likely to be long-lasting. “The German economy will face a significant burden over an extended period,” he says.