After some drama, about 10 weeks after the German election, Europe's largest economy finally had a leader: Friedrich Merz.

His promotion is not easy. Merz failed to be elected Prime Minister on Tuesday with a shocking first-round vote, an unprecedented event in the country's modern history. Despite the necessary parliamentary support in a second attempt later that day, Meles seems to have started his new role in some way.

"This is the weakest start," Carsten Brzeski, global head of ING Macro, told CNBC.

Other observers, including Cyrus de la Rubia, chief economist at Hamburg Commercial Bank, seem to be less concerned.

"I think no one will talk about it any more in the week or so from now on. Instead, people will look at what the government is doing and what it is doing."

Either way, the hard work is actually started only for the new prime minister and head of the coalition government, composed of his Christian Democratic League (Christian Social Alliance) and the Social Democratic Party.

Some challenges include addressing geopolitical tensions such as immigration, defense spending and trade within the country, a stagnant economy and the issue of bringing the ruling coalition and keeping the ruling coalition union together.

Germany's economy will be the top consideration for Meers, and promised reforms and new investments, and severely criticized the former government's policies during the campaign.

For more than two years, the country has seen economic expansion and contraction every quarter. In 2023 and 2024, annual GDP growth was negative. The latest forecast does not seem to indicate a future respite.

Although CDU/CSU and SPD have pushed for major fiscal plans in their alliance negotiations, including changes to long-term debt rules to allow for more defense spending and €500 billion ($567 billion) of infrastructure and climate investment funds.

Ing's Brzeski said the cash seemed safe at least, but questions about other fiscal and economic policies have emerged.

"I don't think it will be touched on the €50 billion infrastructure package, which is a deal," Burzki said, adding that "all other measures, such as faster publicity for investments or corporate tax cuts in 2028, have become more uncertain than before."

Franziska Palmas, a senior European economist in capital economics, also saw the fiscal plan implemented as planned.

"We think this will significantly increase GDP growth and lift Germany out of stagnation in six years," Palmas told CNBC, but noted that this smaller or more time risk increases due to obvious dissatisfaction in some parts of the alliance faction.

Another key issue for the impact of Tuesday's turmoil is trust within the league, which may be crucial to the government's economic policy plan, according to Otto Fricke, a former member of the Liberal Democratic federal government.

"In the end, the question is about the most important issue in politics: trust," he said in a speech to CNBC's "Early European Version" on Wednesday. Germany's economy needs to change if the goal is to grow.

“So you need trust in the cabinet, in parliament to quickly enforce the legislation.”

Palmas of Capital Economics noted that Merz's vows were more stable than the previous government, which eventually collapsed in disagreements on economic and fiscal affairs.

“After his tenure began to be tricky, he would not be able to deliver on his promises than the previous traffic light alliance, he would not be able to deliver on his more efficient and conflict-free government. ”

But despite the obvious tensions and instability increase, De la Rubia of Hamburg Commercial Bank also pointed out that, as highlighted by their Union Alliance Agreement, CDU/CSU and SPD are not actually politically different.

For example, everyone should be able to reach a consensus on the need to invest in railways, roads, bridges and other infrastructure through the fund, and also find consensus on defense spending without “suffering conflict.”

So while Melz's first round failure on Tuesday might be a lesson that parliamentarians taught him, that doesn't mean the new government has escaped major changes.

"This does not mean that they must avoid the necessary reforms to modernize infrastructure to reduce the traditional tape festival, especially in the approval process for construction work, wind farms and grids, to improve the digital process and take measures to reduce labor shortages," he said.

“My questions about the new government’s ability to achieve its major policy objectives”