Germany’s general election was undeniably a calm affair. The two major contestants, the Christian Democrats (CDU) of Chancellor Angela Merkel and the Social Democrats (SPD) never tore into each other or presented major choices to the voters — but then, having worked hand in hand with each other in coalition for the past four years, that would have been difficult. Inevitably as a result, there was a sense of public disenchantment which was reflected in the drop in support for the two traditional giants of German politics; instead, many voters shifted to the smaller fringe parties on the left and right.
But rarely has what happened and the consequences been so totally different. Support for Chancellor Merkel’s CDU dropped but she has emerged in triumph, doubly so. That is because support for her coalition partners, the center-left SPD, plummeted even further than for the CDU. It went into free-fall — dropping to its lowest point ever. As a result, not only is she reconfirmed as chancellor, she can now do what she has wanted to do for the past four years ago — ditch the SPD and the political straitjacket that the unloved marriage of necessity imposed on her. What was a coalition of the center becomes a coalition of the right — and a strong stable one — as she enters a political marriage with her real partners of choice, the pro-business Free Democrats.
This has major implications, not just for Germany but for Europe and the rest of the world. An economically stronger and more powerful Germany is set to emerge in the wake of major changes in economic policy that the new coalition can be expected to make. There will be the tax cuts that for the past four years Merkel was unable to make, particularly of income tax which the Free Democrats want reduced; there will be cuts in government subsidies and privatizations (probably of the railways and possibly of the postal services); nuclear power will not be phased out; there will be reforms on the labor market.
Perhaps the single-most important development will be a revival of confidence in the German economy. Investment may well flood in now that Merkel is seen to be in charge on her own terms. Before she became chancellor four years ago, she was perceived as Germany’s Margaret Thatcher, a free-market champion who would roll back the tide of socialism and give new impetus to an economy already in recession, long before the global economic crisis struck. Unemployment had started to rise as German manufacturers moved production lines to the cheaper economies of Eastern Europe and as competition with China started to bite. The present crisis has hit Germany hard but even if things were to go back to the situation as it was prior to the middle of last year, before the collapse of confidence in the banks and the market, the German economy would still be in deep trouble. When the recession is finally over, competition from China and other emerging economies will still be there; it is not going away.
A change in Germany’s featherbedded socio-economic policies is probably the only way to make it leaner and fitter and therefore better able to survive the chill eastern winds of competition. That change is what the new coalition proposes.
