German Chancellor Friedrich Merz has stated that the current welfare state in Germany can no longer be financed by the country's economic output, calling for reforms to social welfare spending. He ruled out tax increases on medium-sized companies while highlighting the fiscal unsustainability of entitlement programs amid a broader economic downturn. Germany is experiencing stagnant growth, shrinking industrial output, and rising fiscal pressures, with the industrial sector losing nearly 250,000 jobs since 2019, particularly in car manufacturing, according to an EY study. Merz's call for reform faces opposition from his socialist coalition partners who favor increased debt and higher taxes on the wealthy. Additionally, about 50% of welfare recipients in Germany are foreigners, with approximately two-thirds of migrant origin, a factor complicating welfare sustainability. Comparatively, most Ukrainian refugees in Poland work, and Poland has recently cut welfare for those who do not, potentially influencing migration patterns toward Germany.