Merkel faces industry attacks over coalition crisis

Germany’s industry lobby has read Berlin’s grand coalition the riot act, warning chancellor Angela Merkel to get her act together and restore lost trust in her administration.

As Dr Merkel’s junior coalition partner struggles to find its seventh leader in 10 years, the chancellor insisted on Tuesday that her government was open for business.

“We will try to manage some more things in the grand coalition,” she told the annual meeting of the BDI industry federation. She promised to examine the scope for corporate tax cuts, and flagged new legislation to ease company hires of skilled non-EU workers.

But business leaders made clear they were unimpressed by the record so far of Dr Merkel’s fourth administration in light of growing risks to the global economy – and to the European economy through Brexit.

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“The government has lost a lot of trust,” said Dieter Kempf, BDI president, alluding to substantial losses for the ruling coalition parties in last month’s European elections. “There needs to be serious and responsible leadership. Europe needs a Germany capable of acting, with a decisive government.”

Tax cuts

At the same gathering, Germany’s Social Democrat (SPD) federal finance minister dismissed Dr Merkel’s idea of corporate tax cuts. While she said the US tax cuts had shifted competitive advantage away from German companies, justifying cuts in Germany, Olaf Scholz said the US would not be able to finance its massive federal deficit for long.

“Each phase of massive tax cuts is always followed by massive tax increases,” he said.

Mr Scholz is one of half a dozen senior SPD figures who has taken himself out of the leadership race prompted by Sunday’s resignation of Andrea Nahles as party chair and head of the SPD parliamentary party. On Monday, an interim trio stepped in to lead the party while, on Tuesday, MPs elected an interim floor leader.

Navel-gazing

With plans taking shape to elect a new leader after regional elections in September, it remains far from certain if that will resolve the difficulties of Berlin’s coalition. Leading left-wingers in the SPD are demanding their party leave power.

Kevin Kühnert, the 29 year old who led opposition to a new grand coalition last year, declined to say on Tuesday if he could see himself as party leader. Side-stepping the question, he said permanent instability and leadership navel-gazing were “super-ruinous” for the party.

“We have so much to clarify: the future of this coalition, what our issue should be in the future,” he told Berlin’s Inforadio. If he was a regular SPD member, watching the party look for another leader after 14 months, he “would throw my membership book out the window and say, ‘you can all kiss my ass’,” he said.

Meanwhile a leading CDU regional ally of Dr Merkel has said her administration’s days are numbered. Armin Laschet, the influential CDU premier of North Rhine-Westphalia, said: “I think that it will last to the autumn, to Christmas, no one can say.”