Fourth Time’s a Charm

Angela Merkel took a big step toward securing a fourth term as Germany’s chancellor after her party, the conservatives, and its center-left rivals agreed recently on the terms of a renewed governing alliance.

After a week of talks covering areas such as taxation and immigration, Angela Merkel’s Christian Democrats and the Social Democrats (SPD), said they had enough of a basis to begin formal and detailed negotiations.

The agreement makes a new government under Ms. Merkel more likely by the end of March, approximately six months after last year’s indecisive election. Nevertheless, the effort could still fail, which would likely lead to another round of elections in the spring.

The fate of Merkel’s chancellorship now depends on whether the policies hashed out by the two parties prove beneficial to dedicated party members. For SPD, their constituents will have the final say on whether their party should enter into the coalition.

Friday’s talks were focused on extra government spending. As a result, there will be an allocation of €46 billion in new expenditures and benefit increases. In addition, a €10 billion tax cut over the next four years. Friday afternoon, the euro was up 0.9%, climbing to a three-year high.

In addition, the two parties expressed that they were open to spending more on the EU budget and making these funds available for capital investments. Germany would also continue to encourage economic overhauls to make members of the union more competitive, a position Germany has taken for many years.

“Angela Merkel has proven to be one of the strongest leaders in the world. If things stay on course, she has a good chance of re-election for a fourth term as German Chancellor” said Keith Knutsson of Integrale Advisors.