Financial Times
December 1, 2013
A thought experiment. Imagine a coalition agreement between the Conservatives and Labour in the UK; or, gulp, the Democrats and the Republicans in the US. Unpleasant – and unlikely.
Yet in Germany such “elephant marriages” of arch-rivals are part of normal politics. And what the country’s rival political parties achieved last week with their grand coalition agreement was, in the end, not too bad. The deal between Chancellor Angela Merkel’s Christian Democrats and the Social Democrats may have been a little verbose. In its 185 pages, I counted the word “competitiveness” 42 times – Germany really does want everyone in the world to become more competitive against everyone else.
That said, the parties agreed a minimum wage and a modest investment programme. They are not raising taxes. They will not pile on any more austerity. Given that the country stands accused of running excessive savings surpluses, you could legitimately call it a small step in the right direction. It is certainly not as bad as it could have been.
The problem is not the agreement. It is a lack of preparedness by the political class for what will hit it in the next four years. The big threat to Germany over the next four years is not demography but the unfolding eurozone debt crisis. No matter which crisis resolution scenario prevails, some promises made to the electorate are going to be broken.
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