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We will feel impact here of Germany’s new government

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Outgoing German Chancellor Angela Merkel. Photo: Reuters

Outgoing German Chancellor Angela Merkel. Photo: Reuters

Outgoing German Chancellor Angela Merkel. Photo: Reuters

The German election, which has big implications for the EU generally and Ireland in particular, has ended with both key parties on a very similar vote share. The immediate result of that is that government-making will take quite some time and the outgoing chancellor, Angela Merkel, will remain on the stage in the interim as caretaker.

Given the torrid time the German people had for the first half of the last century, the majority of them have craved stability and prosperity since the post-World War II state was founded in 1949. Ms Merkel has provided just that for the past 16 years across four terms as head of government.

As the European Union’s most populous state with the biggest economy, ranked fourth globally, what happens in Germany has a real effect upon all of us. The new government permutation which comes after Angela Merkel’s eventual departure will have a big impact here.

Ms Merkel has been a good friend of Ireland through the post-Brexit talks, understanding implicitly, as somebody who grew up on the wrong side of a divided Germany, what partition means and the urgent need to ensure there could be no return of a hard and visible border on this island.

Against that her insistence upon austerity policies and the need for each member state to resolve their own problems in the wake of the 2008 economic crash was really bad news for this country.

Chancellor Merkel was more of a ‘manager’ than a ‘leader’ and this was especially true of her approach to the EU issues. It really took until this past summer for her to show true initiative by backing the idea of the European Union breaking a long-standing taboo to borrow funding for a post-Covid 19 economic recovery.

The most immediate impact for Ireland will be seen in the new German government’s approach to revising EU rules on budget deficits and long-term debt. Through the Covid-19 pandemic these tight rules have been suspended. But debate about how and when they should be reinstated is already under way and they are scheduled to resume in 2023 giving these discussions real urgency.

The social democrat SPD, under standard bearer Olaf Scholz, are minded to be more flexible about restoring these EU budget rules making space for more social spending. The outgoing Christian Democrat CDU, under frontrunner Armin Laschet, always tends to focus more on the ‘cost’ of Europe.

If the smaller, liberal FDP party succeeds in winning the finance ministry as their price of coalition, we can expect a much more conservative approach to EU finance structures. Against that, the German Green Party’s strong chances of getting into government, a place they were last in 1998-2002, will confirm them as a fully fledged party of the mainstream and also give urgency to EU efforts to tackle climate change.

The curtain is about to come down on the Merkel era of stability, but also of neglect on key issues. What happens next will take some time to emerge. But developments will be watched keenly across the globe, and not least in Ireland.

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