Back
21 Oct 2013
Germany edges towards a working government as SPD votes to begin negotiations
FXstreet.com (London) - Germany is edging closer to a working government after the Social Democrats (SPD) voted to enter into negotiations to form a grand coalition with Chancellor Angela Merkel.
Tomorrow will mark a month since Merkel’s Christian Democrat Union achieved the strongest election result since reunification. Although the CDU and the CSU won 42 percent of the vote, they fell five seats short of an absolute majority. In addition, Merkel’s former coalition partners, the classical liber FPD failed to reach the 5 percent threshold necessary to rake seats in the Bundestag.
The SPD will begin talks on 23 October, with any agreement put to the whole of the SPD’s 470,000 membership. The talks will begin the day before Merkel attends the European Leader’s summit in Brussels. While Merkel is likely to concede ground on minimum wage laws as a sweetener for coalition agreements, a sticking point may come over the SPD’s stance towards German support of the European banking sector, with the SPD firmly opposing recapitalisation of struggling banks through the European bailout fund.
The CDU and CSU have previously formed a “grand coalition” with the SPD, resulting in a strained relationship. However, this time around the dynamic of the coalition will be different to 2005-2009 when the CDU/CSU took 226 seats to Gerhard Schroeder and the SPD’s 222 seats. With 311 seats to the SPD’s 193, the SPD will be very much the junior partner. However, with any agreement first needing to be ratified by the SPD’s membership as a whole, Merkel will be crossing her fingers that a coalition can be formed before Christmas.
Tomorrow will mark a month since Merkel’s Christian Democrat Union achieved the strongest election result since reunification. Although the CDU and the CSU won 42 percent of the vote, they fell five seats short of an absolute majority. In addition, Merkel’s former coalition partners, the classical liber FPD failed to reach the 5 percent threshold necessary to rake seats in the Bundestag.
The SPD will begin talks on 23 October, with any agreement put to the whole of the SPD’s 470,000 membership. The talks will begin the day before Merkel attends the European Leader’s summit in Brussels. While Merkel is likely to concede ground on minimum wage laws as a sweetener for coalition agreements, a sticking point may come over the SPD’s stance towards German support of the European banking sector, with the SPD firmly opposing recapitalisation of struggling banks through the European bailout fund.
The CDU and CSU have previously formed a “grand coalition” with the SPD, resulting in a strained relationship. However, this time around the dynamic of the coalition will be different to 2005-2009 when the CDU/CSU took 226 seats to Gerhard Schroeder and the SPD’s 222 seats. With 311 seats to the SPD’s 193, the SPD will be very much the junior partner. However, with any agreement first needing to be ratified by the SPD’s membership as a whole, Merkel will be crossing her fingers that a coalition can be formed before Christmas.