The German chancellor Angela Merkel is to start talks on a "groundbreaking coalition government" with the Greens and Liberal Free Democrats after her conservative bloc resolved a "long-running dispute over refugee policy", says Guy Chazan in the Financial Times. Merkel's Christian Democrats and its Bavarian sister party, the Christian Social Union, have agreed to cap the number of refugees annually at 200,000, except in emergencies.
Talks with the FDP and Greens will start on 18 October. The three parties are not natural bedfellows, but Merkel has little choice after the Social Democrats (SDP) ruled out talks. Merkel's CDU/CSU bloc and the Social Democrats (SDP), her coalition partner of the past four years, performed poorly in last month's elections, propelling the far-right Alternative for Germany into parliament as the third-largest party.
Europhiles worry that the Jamaica coalition so-called because the black, green and yellow colours of the three parties make up the Jamaican flag could be "dangerous" for the EU, particularly given the "increasingly euro-critical" FDP, says Guntram Wolff in the Nikkei Asian Review.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
But the worries are overblown. The FDP's desire for countries to be "held more strictly to the stability and growth pact" is shared by Wolfgang Schuble, Germany's outgoing finance minister. A eurozone budget or banking union is a red line for the FDP, but even under a CDU/SPD coalition, Germany would not have been "willing to provide ample tax funding to help ailing euro area economies".
And the coalition could be a boon for Germany, as all the ingredients for future success are there. The Greens and the FDP want to upgrade digital strategy, mitigate climate change, liberalise the services sector, improve education and cut taxes to boost investment. So a deal could catalyse important economic reforms that will "trigger growth and investment" in Germany and support demand in the wider eurozone. The key, however, will be to delegate responsibility in a way that ensures campaign promises turn into policies.
Sign up for MoneyWeek's newsletters
Get the latest financial news, insights and expert analysis from our award-winning MoneyWeek team, to help you understand what really matters when it comes to your finances.
Emily has worked as a journalist for more than thirty years and was formerly Assistant Editor of MoneyWeek, which she helped launch in 2000. Prior to this, she was Deputy Features Editor of The Times and a Commissioning Editor for The Independent on Sunday and The Daily Telegraph. She has written for most of the national newspapers including The Times, the Daily and Sunday Telegraph, The Evening Standard and The Daily Mail, She interviewed celebrities weekly for The Sunday Telegraph and wrote a regular column for The Evening Standard. As Political Editor of MoneyWeek, Emily has covered subjects from Brexit to the Gaza war.
Aside from her writing, Emily trained as Nutritional Therapist following her son's diagnosis with Type 1 diabetes in 2011 and now works as a practitioner for Nature Doc, offering one-to-one consultations and running workshops in Oxfordshire.
Review: Trisara, Phuket – a feast for the senses in Thailand
Expecting an inheritance? Don’t – only a fifth of Boomers plan to part with their cash
