German result is a clear vote for stability

Merkel rewarded for her steady stewardship of the German economy and labour market

Angela Merkel, Germany’s chancellor and party leader of the Christian Democratic Union (CDU), speaks with supporters on stage during victory celebrations at the CDU headquarters after the German federal elections results were announced in Berlin. Photograph: Krisztian Bocsi/Bloomberg

Angela Merkel, Germany’s chancellor and party leader of the Christian Democratic Union (CDU), speaks with supporters on stage during victory celebrations at the CDU headquarters after the German federal elections results were announced in Berlin. Photograph: Krisztian Bocsi/Bloomberg

Mon, Sep 23, 2013, 09:39

For many watching from Ireland, a triumph for Angela Merkel was not the result they were hoping for.

But four more Merkel years is what they will get after Germans handed her centre-right Christian Democrats (CDU) its best result in two decades.

Yesterday’s vote was a clear vote for stability. Germans rewarded Merkel for steady stewardship of the German economy and labour market. They also backed what they see as her robust defence of Germany’s interests in the euro crisis, in particular making financial support conditional on reforms and cuts in programme countries.

For Germany’s European partners, in particular Ireland, that endorsement of Merkel means four more years of the same policies are likely.

Angela Merkel has two coalition options, the most likely a return of the grand coalition with the centre-left Social Democratic Party (SPD) that first helped her to office in 2005.

Wary of a second spin on the merry-go-round with her, the SPD - decidedly more left-wing than in 2005 - is likely to drive a hard bargain on domestic issues like a minimum wage and tax reform.

On EU affairs, the SPD ran a campaign promising a Marshall Plan for investment and economic stimulus in the eurozone. But their meagre three-point rise in support means that is unlikely to come to pass - or at least not in the grand style they promised.

Instead, the SPD price for supporting Merkel may come on smaller EU items already in play: faster progress than to date on a financial transaction tax, in which Ireland will not participate, and a banking union to backstop EU financial markets against future crises.

But, at home, the SPD doesn’t challenge Dr Merkel’s reading of the euro crisis as a sovereign debt crisis. That means we are unlikely to see a revolutionary departure from austerity-first strategy pursued by Merkel in the last four years, and backed by them from the opposition benches in the last four years.

In the end, much will depend on whether the SPD insist on the finance ministry being part of any grand coalition package. In the first grand coalition the finance minister was Peer Steinbrück, who mounted the SPD’s failed challenge to Merkel yesterday. He has said he is unwilling to serve under her again.

And Chancellor Merkel is unlikely to want to sacrifice her trusted finance minister, Wolfgang Schäuble. He said last night he stood ready to serve Dr Merkel again and indicated he was open to the idea of a grand coalition as “not an ideal” but often a necessary alliance.

After last night’s result, Angela Merkel goes strengthened into coalition talks - and back into the EU fray.