Victorious Merkel aims for quick coalition

Victorious Merkel aims for quick coalition

Strong Free Democrats poised to make tough demands in Germany

Merkel’s conservatives won a parliamentary majority on Sunday with the FDP, her partner of choice, enabling her to end her awkward four-year-old partnership with the Social Democrats.

Now the centre-right parties must try to hammer out agreements on a range of issues including tax, labour market policy and the role of nuclear energy in Europe’s biggest economy. “Coalition talks should start as soon as possible,” said Ronald Pofalla, General Secretary of Merkel’s Christian Democrats (CDU). “It is our goal to have a coalition deal in a month at the latest.”

Major challenges

The next government faces major economic challenges. It will have to curb a surging budget deficit, cope with rising unemployment and ward off a credit crunch.
The coalition negotiations could be tough because an emboldened FDP, buoyed by a strong showing in Sunday’s vote, is likely to make hefty demands of the conservatives and it is unclear whether Merkel will adopt a more radical approach.
The FDP is likely to get three or four ministries. Traditionally it has controlled the foreign, economy and justice portfolios.

“We would expect both parties to agree on a cautious reform approach with respect to the labour market and the social security system,” said Goldman Sachs economist Dirk Schumacher in a research note.

“The FDP will certainly push .. for more reforms but Merkel’s reform appetite seems limited,” he added.

While governing with the SPD in the last four years, Merkel has shifted leftwards and it is unclear whether she will stick to that in a partnership with the FDP.

Pofalla said his conservatives were committed to their election promise of tax cuts worth 15 billion euros ($22.03 billion) but the party has steadfastly refused to put a timetable on its plans, due mainly to weak public finances.

Preliminary official results put Merkel’s conservative bloc, the CDU and Bavarian Christian Social Union (CSU), on 33.8 per cent, their second-worst postwar result, down from 35.2 per cent in 2005. The FDP offset the losses, surging to 14.6 per cent, its best ever score, and putting the centre-right ahead.

The SPD was the biggest loser and will join the Greens and Left party in opposition after plummeting more than 11 points to 23 per cent, its worst result since World War II

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