Merkel wins as Germans choose centre-right

BERLIN (Reuters) – Ger-man voters gave Chancellor  Angela Merkel a second term on Sunday and a mandate to partner  with the pro-business Free Democrats (FDP) in a government that  will rein in the role of the state in Europe’s largest economy.

Merkel, 55, has ruled for the past four years in a “grand  coalition” with the centre-left Social Democrats (SPD), an  awkward partnership of traditional rivals.

The election result frees her from the shackles of that  marriage of convenience, allowing her to form the centre-right  government she has argued is best placed to nurture Germany back  to health after its worst recession in the post-war era.

Merkel, who narrowly squeezed into power in 2005, appeared  relieved at her clear-cut victory in an election which pollsters  had predicted could again be a cliffhanger.

“What counts for me is that we got a change in the shape of  the government,” she told supporters who chanted “Angie, Angie”  as she strode up to the stage at her party headquarters, wearing  a bright red suit.

“We can really celebrate tonight, but afterwards we have a  hard job ahead of us,” she added, vowing to be a chancellor for  “all Germans”.

The next government faces major economic challenges. It will  have to get a surging budget deficit under control, cope with  rising unemployment and ward off a credit crunch as fragile  banks rein in lending.   Together with the FDP, Merkel is expected to look for  opportunities to reduce taxes, sell off state holdings in  companies like rail operator Deutsche Bahn, and reverse an  SPD-orchestrated phase-out of Germany’s nuclear power plants.

But the partners, which last ruled Germany between 1982 and  1998 when Helmut Kohl was chancellor, will also have to overcome  differences on the size and timing of tax cuts in tough  coalition talks over the coming weeks.

Given the budget constraints facing the new government, it  may have to put off some of its more ambitious fiscal plans  until next year or beyond. “The new government will face some of the most difficult  challenges we’ve seen over the last 50 years,” said Andreas  Rees, an economist at Unicredit.

FDP big winner
The vote took place against a backdrop of heightened  security after al Qaeda issued several videos last week  threatening to punish Ger-many if voters backed a government that  kept German troops in Afghanistan.

Projections from ARD and ZDF public television showed  Merkel’s conservative bloc — the Christian Democratic Union (CDU) and the Bavarian Christian Social Union (CSU) — on 33.8  per cent, down from a score of 35.2 per cent in 2005, and their  second-worst result in the post-war era.

But the FDP, a party which saw its support rise in the wake  of the financial crisis, compensated for those losses, surging  to 14.5 per cent, its best score ever, and putting the  centre-right over the top.

The SPD, which has been in government for over a decade, was  the big loser in the election and will join the environmentalist  Greens and Left party in opposition after plummeting over 11  points to 23.1 per cent, its worst result since the war.

Merkel’s SPD challenger Frank-Walter Steinmeier, who served  as her foreign minister for the past four years, called it a  “bitter defeat.“ Projec-tions showed the Greens on 10.1 percent  and the Left on 12.5 per cent.

Cautious campaign
Germany’s first woman chancellor and the first to have grown  up in the former communist east, Merkel ran a cautious campaign  that steered clear of the bold economic reform plans she  advocated before the 2005 vote and sought to leverage her high  personal popularity ratings.

Despite criticism for her slow reaction to the financial  crisis, consensus-hungry Germans have welcomed her steady,  low-key style. Unlike voters in Japan and the United States,  they showed no signs they wanted a change of leadership.
She now faces a long list of challenges that will test her  new coalition.

The future of 25,000 German workers at carmaker Opel is  riding on Berlin’s ability to push through a sale of the General  Motors unit to Canadian car parts group Magna.

Within months of taking power, the new government will have  to renew a parliamentary mandate for German participation in the  unpopular NATO-led mission in Afghanistan in the face of a more  powerful leftist opposition.

“The result means that we will see more confrontation at the  federal level because the SPD will move to the left,” said Uwe  Andersen, a political scientist at the University of Bochum.

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