BERLIN (AP) — Germany's parliament on Friday approved a pension reform package that had prompted a rebellion in the ranks of Chancellor Friedrich Merz's party, averting a crisis for the government after a bumpy first seven months in office.
Lawmakers in the lower house voted 318-224 in favor of the package, including a measure that would hold the level of state pensions at 48% of average wages until 2031. There were 53 abstentions.
A group of 18 young lawmakers in Merz’s center-right Union bloc — a larger number than his coalition’s parliamentary majority — had balked for weeks at a provision that said after 2031, the pension level would be slightly higher than it would be under current law. They argued that that would cost up to 15 billion euros ($17.5 billion) per year, and that this would come at the expense of young people.
Merz’s junior coalition partners, the center-left Social Democrats, were adamant that the package be approved unchanged. Merz backed that.
The measure to maintain the value of pensions was part of a package which also contains changes sought by Merz’s conservative bloc, including a tax break that would make it easier for retirees to continue working.
In an effort to assuage dissenters, coalition leaders stressed that a commission will produce proposals for a further-reaching reform of the pension system by mid-2026 as Germany, like many other countries, addresses the challenge of an aging population.
“This is not the end of our pension policy, but only the beginning,” Merz said after the vote. He said the discussion had shown “how big the challenges are that our country faces.”
Keen to show that he is in command of the government's parliamentary majority, Merz pushed for approval by an absolute majority of the house's 630 lawmakers, which wasn't strictly necessary. Friday's result saved him from the potential embarrassment of getting the measures passed thanks only to abstentions by the opposition Left Party. In the end, seven of his bloc's lawmakers voted against, two abstained and one didn't vote.
Merz set out to avoid the infighting that plagued predecessor Olaf Scholz’s government and resulted in its collapse last year. However, he needed an unprecedented two rounds of voting in parliament to get elected as chancellor in May. There was also a high-profile altercation in his own ranks in July over a center-left nominee for Germany’s highest court, who ultimately withdrew her candidacy.
He has acknowledged that his coalition has engaged in “too many public discussions” since it took office, with priorities that included revitalizing Germany’s stagnant economy and reducing irregular migration. Germans appear unimpressed with him and his government, while support for the far-right Alternative for Germany has grown since the country’s election in February
German Chancellor Friedrich Merz attends a meeting of the German Parliament in Berlin, Germany, Friday, Dec.5, 2025. (AP Photo/Ebrahim Noroozi)
German Chancellor Friedrich Merz, right, and Vice Chancellor Lars Klingbeil attend a meeting about a pension package in the German Parliament in Berlin, Germany, Friday, Dec.5, 2025. (AP Photo/Ebrahim Noroozi)
NEW YORK (AP) — The U.S. stock market is ticking toward the edge of its all-time high on Friday as Wall Street drifts toward the finish of a quiet week.
The S&P 500 rose 0.4% and is just 0.1% below its record. The Dow Jones Industrial Average was up 189 points, or 0.4%, as of 9:59 a.m. Eastern time, and the Nasdaq composite was 0.4% higher.
Ulta Beauty helped lead the way and jumped 11.2% after the retailer reported stronger profit and revenue for the latest quarter than analysts expected. CEO Kecia Steelman said its customers are broadly feeling pressure, but Ulta saw growth across its categories, particularly in e-commerce. It raised its forecast for revenue over the full year.
Another encouraging signal for the holiday shopping season came from Victoria’s Secret & Co. It reported a milder loss for the latest quarter than analysts expected, and it likewise raised its forecast for sales over the full year. Its stock jumped 16.6%.
Warner Bros. Discovery was also strong and rose 2.8%. Netflix said it would buy Warner Bros. for $72 billion in cash and stock following the pending split for the company behind HBO Max, “Casablanca” and “Harry Potter” from Discovery Global.
The deal between the two giants could raise fears about too much industry power residing in one company, though, meaning it may not be a sure thing. After initially falling more than 5%, Netflix's stock pared its drop to a dip of 0.6%.
Paramount Skydance, which earlier had been seen as a front-runner to buy Warner Bros., fell 5.6%.
Also on the losing end of Wall Street was Hewlett Packard Enterprise. It fell 1% after reporting weaker revenue for the latest quarter than analysts forecast, though its profit topped expectations.
The U.S. stock market broadly has been much quieter this week. It’s a respite following earlier weeks of sharp and scary swings driven by worries that too many dollars may be flowing into artificial-intelligence technology, along with concerns about what the Federal Reserve will do with interest rates.
After some back and forth, the widespread expectation among traders is that the Fed will cut its main interest rate next week in hopes of shoring up the slowing U.S. job market. If it does, that would be the third cut of the year.
Investors love lower interest rates because they boost prices for investments and can juice the economy. The downside is that they can worsen inflation, which is stubbornly remaining above the Fed’s 2% target.
The S&P 500 has run back toward its all-time high, which was set in late October, in large part because of expectations for a coming cut to interest rates. That leaves the question of what Fed officials will do next year on rates, with traders waiting for any clues that may come out of next week’s Fed meeting.
In the bond market, Treasury yields held relatively steady amid the wait. The yield on the 10-year Treasury edged down to 4.10% from 4.11% late Thursday. The two-year Treasury yield, which more closely tracks expectations for what the Fed will do, edged up to 3.54% from 3.52%.
In stock markets abroad, indexes rose across much of Europe and Asia.
Germany’s DAX returned 0.9%, and South Korea’s Kospi jumped 1.8% for two of the world’s bigger gains.
Tokyo’s Nikkei 225 fell 1.1% after data showed household spending in Japan fell 3.0% in October from a year earlier. It was the sharpest drop since January 2024. Japanese markets have been shaky recently after the Bank of Japan hinted that hikes to interest rates may be coming.
AP Writer Teresa Cerojano contributed.
Options trader Joseph D'Arrigo works on the floor of the New York Stock Exchange, Tuesday, Dec. 2, 2025. (AP Photo/Richard Drew)
Currency traders work near a screen showing the Korea Composite Stock Price Index (KOSPI) and the foreign exchange rate between U.S. dollar and South Korean won, top right, at the foreign exchange dealing room of the Hana Bank headquarters, in Seoul, South Korea, Friday, Dec. 5, 2025. (AP Photo/Ahn Young-joon)
Currency traders watch monitors near a screen showing the Korea Composite Stock Price Index (KOSPI) and the foreign exchange rate between U.S. dollar and South Korean won, top right, at the foreign exchange dealing room of the Hana Bank headquarters, in Seoul, South Korea, Friday, Dec. 5, 2025. (AP Photo/Ahn Young-joon)
Currency traders pass by a screen showing the Korea Composite Stock Price Index (KOSPI), top center left, and the foreign exchange rate between U.S. dollar and South Korean won, top center, at the foreign exchange dealing room of the Hana Bank headquarters, in Seoul, South Korea, Friday, Dec. 5, 2025. (AP Photo/Ahn Young-joon)
