Global News Journal
Beyond the World news headlines
Germans have voted for change. A centre-right government with a clear parliamentary majority will replace the ungainly grand coalition of conservatives and Social Democrats that ran Europe's biggest economy for the last four years.
This should mean an end to "steady as she goes" lowest common denominator policies, and at least some reform of the country's tax and welfare system. The liberal Free Democrats, who recorded their best ever result with around 14.7 percent, will try to pull the new government towards tax cuts, health care reform, a reduction in welfare spending and a loosening of job protection in small business.
Conservative Chancellor Angela Merkel, a cautious centrist, made clear in her first post-election comments that she she would not allow a radical lurch to the right. She promised to be the "chancellor of all Germans" -- old and young, entrepreneurs and workers -- and said the conseravtives would be sufficiently dominant in the new coalition to prevail "in questions that affect social balance".
The new government faces tough economic challenges in what is bound to be a more polarised political atmosphere, with the Social Democrats in opposition. The economy is expected to contract by at least 5 percent this year, and export-led growth is likely to return only slowly. Unemployment is set to explode in the coming months as short-time work schemes run out. The budget deficit is set to top 6 percent of gross domestic product next year, more than twice the EU limit. So 2010 will be an extremely difficult year. But there are some problems that are even more urgent.
Germany’s 37-year-old economy minister, Karl-Theodor zu Guttenberg, could become a liability for Chancellor Angela Merkel in September’s election thanks to his open criticism of the government’s 11th-hour rescue of carmaker Opel.
Guttenberg, a rising star in Merkel’s conservative camp, had argued for an Opel insolvency in the days preceding the deal.
It’s not quite as bad as it was back in 2003 when Gerhard Schroeder publicly chastised George W. Bush for invading Iraq and Condi Rice introduced a new policy in the White House called ”ignore Germany” (France was to be punished and Russia forgiven for their opposition to the war).
But relations between Berlin and Washington are probably as poor as they’ve been since Angela Merkel replaced Schroeder in 2005 and set Germany on a course of reconciliation with the United States.