Cautious welcome as shape of Merkel’s coalition yet to emerge

Triumph of CDU widely seen as a vote of confidence in Dr Merkel’s euro zone strategy

Social Democratic Party Peer Steinbrueck served as finance minister under Angela Merkel between 2005 and 2009. Photograph: Ralph Orlowski/Reuters

Social Democratic Party Peer Steinbrueck served as finance minister under Angela Merkel between 2005 and 2009. Photograph: Ralph Orlowski/Reuters

Tue, Sep 24, 2013, 01:00



There was a cautious welcome across Europe to the results of the German election, as Angela Merkel’s Christian Democratic Union (CDU) secured a third term in office.

But with the final permutation of Germany’s next government yet unknown, Dr Merkel’s European partners – and financial markets – were still awaiting signs of any substantive change in euro zone policy from the bloc’s most powerful member.

Despite Dr Merkel’s claims yesterday that there would be no change in euro zone policy, there were suggestions that a possible tie-up with the Social Democrats could signal a softening of austerity measures. The left-leaning opposition party has consistently criticised the CDU’s economic policy of tough fiscal measures.

The CDU’s outgoing junior coalition partner, the Free Democratic Party, was also widely considered to be more the more extreme advocate of fiscal discipline and austerity.

With negotiations on the formation of a “grand coalition” set to begin later this week, the Social Democrats are likely to demand concessions as part of any tie-up. The party is still smarting from the fallout from its last coalition experience, which saw it lose support at the expense of a strengthened CDU.

Negotiations could see the Social Democrats demand the finance brief – its leader Peer Steinbrueck served as finance minister under Angela Merkel between 2005 and 2009. In this scenario, the possible exit of Wolfgang Schäuble (71) from the European political scene would have profound ramifications for the bloc’s economic policy. However, as discussions begin on the formation of a government, the CDU may be more likely to cede ground to the centre-left Social Democrats on domestic rather than euro zone policy issues.

The triumph of the CDU in Sunday’s elections is also widely seen as a vote of confidence in Dr Merkel’s euro zone strategy, lessening the incentive for any U-turn on the party’s stance.

Of most concern yesterday in Brussels was the potential political vacuum that has been created by the results of the election – it took more than two months for the last “grand coalition” to be formed in 2005.

Leaders from across the EU and further afield welcomed the CDU victory in the usual diplomatic language. European Council president Herman Van Rompuy typified the tenor of the political reaction, saying he looked forward to continuing “the close co-operation with Angela Merkel”.

However, there were also dissenting voices. The Italian daily newspaper Il Giornale, owned by Silvio Berlusconi, said the result risked leaving Europe “in the hands of the chancellor who helped exacerbate the economic crisis”. In Greece, the centre-left newspaper Ta Nea displayed a picture of the German chancellor on a throne with the headline “Triumph for the queen of austerity”.