This German government matters more than most. It has the future not just of Germany but of Europe in its hands
Two months on from September's general election, Angela Merkel's centre-right CDU-CSU finally signed a pact this week with their main rival, Sigmar Gabriel's centre-left SPD, to form Germany's third postwar grand coalition. As a general rule, a securely based German government is good for Germany, good for Europe and good for Britain. So, what's not to welcome about this week's agreement?
More than you might think. The coalition-building process set in motion by September's election provides a first note of caution. Those elections were a major vote of confidence in Mrs Merkel, but left her just short of an overall majority in the Bundestag. As a result, she has had to make significant concessions to entice the SPD into a pact in which they are more clearly a junior partner than in the grand coalitions of 1966 or 2005. An unprecedented ballot of SPD members will now decide if the new coalition goes ahead. The outcome is not a given. The political fragility of the new arrangements is not a good starting point.
Another concern is the extent to which the 185-page coalition agreement addresses Germany's real problems. With its ageing population, Germany ought to be investing more in its young people. Instead the agreement rewards the elderly at the expense of the young, cutting the pension age at a time when most of Europe is raising it, and boosting pensions.
Nor is there much in the agreement to suggest the arrival of the SPD will mean a better deal for Germany's economically hard-pressed southern eurozone allies. The Merkel-Gabriel deal has plenty of largesse for German workers and claimants – the new minimum wage will be worth 70p an hour more than its equivalent in Britain – but little relief for Greek, Spanish and Portuguese unemployed workers whose governments hoped a right-left coalition would cut them some slack on fiscal austerity.
From a British perspective, the new government also presents an uncertain picture. The often pragmatic Mrs Merkel is potentially the key to striking a deal that will enable David Cameron, if re-elected, to recommend – as he should – that the UK remains in the EU. But the SPD has yet to show it understands the case for more flexible post-crash thinking about the EU, not just in relation to Britain. The parties of Europe need to listen to one another with a lot of care and respect if they are to help our continent through these difficult times.
It will have taken three months to form Germany's new government by the time things are sorted. The lesson that coalitions take time to be formed needs to be learned here too. For this German government matters more than most. It has the future not just of Germany but of Europe in its hands. The third Merkel government will also shape Britain's future. It carries not just hopes, but huge responsibilities.
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