PASSING THE BATON?
After sixteen years, the German political landscape is no longer dominated by Angela Merkel. Well, that may not be quite true, since she will re-main as Chancellor until the results of last Sunday’s elections can be turned into a governing coalition. Given that the German electorate produced one of the most frag-mented results in the country’s history, there are a num-ber of possibilities. However, if we assume that the “Grand Coalition” under which Merkel has been running Germany over the past few years has run its course, then the most likely alternatives are either the “Traffic Light” coalition or the “Jamaica” coalition, both named after the combination of colours of the parties in-volved. The Traffic Light coalition would see the centre-left SPD combine with the Greens and the Liberal FDP under the leadership of Olaf Schulz, who has been Finance Minister in Ms Merkel’s coalition government. This would have a comfortable majority in the Bundestag and, given the presence of the FDP would probably be seen as less likely to result in high-er taxes, particularly on the wealthy and on companies. That, combined with the poor showing of The Left is probably why the market bounced on Monday morning as the result became clear.
If it isn’t a Traffic Light coalition then there re-mains the possibility that the centre right CDU/CSU could form a “Jamaica” coalition under the leadership of Armin Laschet. This would again involve both the FDP and the Greens, so would probably also be seen as a continuity coalition.
Perhaps more interesting, however, is who fills the vacuum left by Merkel’s departure as the de-facto leader of the EU. Neither Schulz nor Laschet have anything like her credibility or popularity. That may well be behind the more vocal, some would say aggres-sive, nature of President Macron’s recent posturings on the need for the EU to become the third superpower. It’s also interesting to note the increase in standing of Mario Draghi, currently Italy’s PM, perhaps Italy’s next President and possibly, just possibly, a Man for All Seasons?