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Ending 2013: Germany’s new government; no easing of the economic headache in Greece …

  • December 21st, 2013
  • Posted by EU Australia

merkel-resizeGermany is to have a Grand Coalition government following close top three months of negotiations and a ballot of members of the Social Democrat party (SPD), which on Saturday agreed to joining up.

With the economy going well, the  new government is expected to be flush with funds, by contrast with the state of Greece, much in Germany’s debt, still uncertain about recovering from its depression.

The German Social Democrats have secured an undertaking in the joint government platform to improve and secure incomes, with introduction of a national minimum wage.

The SPD chairman Sigmar Gabriel has also signed on to a priority platform of the majority Christian Democrats and Social Democrats, by taking on in his economics ministry the drive for renewable energy sources.

Germany has pledged to get out of nuclear power production by 2020, following the disaster at the Fukushima power plant in Japan in 2011.

The Christian Democrat leader, Chancellor Angela Merkel, wants to keep the emphasis on financial stability in Europe; prepared to assist faltering economies in the European Union , like Greece, Portugal and Spain, while insisting on stiff budget measures towards repayment.

Her Finance Minister, Wolfgang Schäuble, who handled Germany’s leading role in managing the European debt crisis, is to stay on.

In elections on 22.9.13, Chancellor Merkel emerged with a clear win among the parties, but without enough parliamentary seats to form a majority; see EUAustralia Online, German Vote: Angela Merkel’s clear win, 23.9.13.

Says this commentary from German radio, the country’s treasury is embarrassingly buoyant for a state that insists on others tightening their finances, close to the point  of national bankruptcy:

“Chancellor Angela Merkel can’t complain about the situation the country finds itself in as she starts her third term. Germany’s economic prospects are better than those of any other country in the EU and tax revenues are pouring in. That means the new government, made up of Christian and Social Democrats, has money to spend, and the coalition agreement makes it sounds as if that’s exactly what they plan to do…

“But Merkel could have a problem: It will be hard for her to preach austerity to the countries hit worst by the euro crisis, like Spain, Greece and Portugal, if she’s doling out the money with both hands back home…”

athens and parthenonIn Greece, the government has been insisting that it us on track to get the country out of recession next year.

It says  0.6% growth is likely in 2014, after more than six years of severe contraction, due to a pick-up in exports including tourism.

Other estimates are, that it cannot turn around the downward trend so quickly, especially given its committed high levels of debt, e.g. the OECD has been expecting a further contraction in Greece, by 0.4% next year.


See EUAustralia Online: EU leaders meet …, 17.3.13; Greek bailouts, 13.12.12.


BBC News, London, Greek economy to shrink for seventh year, OECD says, 27.11.13., (21.12.13).

DWE, Bonn, The tasks ahead for the grand coalition, 16.12.13, I(21.12.13).

Erik Kirschbaum, German SPD members vote to join Merkel despite misgivings, Reuters, London, 14.12.13., (21.12.13).

Niki Kitsantonis, After Years of Pain, Greece Expects a Budget Surplus, NYT, NY, 7.10.13., (21.12.13).