As Europe’s dominant economy, Germany’s decision to form a grand coalition in the next few weeks could have a wider effect on member states of the European Union.
“It is crucial to think of how we can make demand grow in the euro zone, and to do so Germany must clarify its economic terms and role in Europe”, said Ebrahim Rahbari, research director at Citigroup at a panel discussion on Monday.
With the European debt crisis still in recovery, member states are looking to Germany for leadership on economic governance and regulation. Yet with negotiations on Germany’s grand coalition still ongoing, member states are also fearing a delay in decisions to fight the euro crisis.
The panel discussion hosted by the European Parliament in London on Monday debated the results of the German election and how these would affect British and EU economies.
“An alliance with the SPD would mean a softer approach towards austerity, while growth of euroscepticism could cause greater danger for the UK”, said Meg Munn, Labour MP and panel speaker.
Although Merkel’s Christian Democrats (CDU) and the Social Democrats (SPD) have expressed differences, such as over the SPD’s condition of a national minimum-wage, the CDU is more likely to form a coalition with the SPD than the CSU- Greens, where wider differences lie on issues of refugee policy and clean energy.
John Peet, Europe editor at The Economist and panel contributor, said that although a new German government is still being formed, hardly any changes will be made to policies.
“The achievement of Angela Merkel in the election is remarkable, and it absolutely convincingly demonstrates that German voters trust her. Europe was hardly discussed during the election, but we assume on our experience of the last four years that she is here to do the right thing for Germany and for Europe – which is why policies won’t change after the election”.
Imke Henkel, UK correspondent for the German magazine Focus added, “Most people voted personally for Merkel rather than her party, what we need now is a German vision that adapts policies to necessities”.
With growth slowly coming back to the euro zone, the fears brought up in 2009 of the Euro being doomed are dwindling, with Britain agreeing that it is in its own national interest to be part of a strong European Union.
“Merkel will do whatever it takes to keep the UK in the European Union. She more than anyone realises the UK is important to the European Union”, Peet said.
Angela Merkel said a third round of talks would be held on Thursday with the Social Democrats to determine whether a coalition government can be formed with the Christian Democrats. A grand coalition between the CDU and SPD would secure an absolute majority for Merkel, following her electoral success in the recent national election.