German coalition faces difficult path

Chancellor Angela Merkel’s centre-right Christian Democratic Union bloc and the Social Democrats have agreed a preliminary deal.

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Coalition talks have been tough
(Image credit: 2018 Getty Images)

Finally a breakthrough in Germany's coalition talks, says Philip Oltermann in The Guardian. Chancellor Angela Merkel's centre-right Christian Democratic Union bloc and the Social Democrats have agreed a preliminary deal. The two parties are set to embark on formal coalition negotiations after agreeing compromises on questions including European integration, healthcare and migration quotas.

"Still, the path ahead promises to be difficult, particularly for SPD leader Martin Schulz," says German weekly Der Spiegel. He needs unequivocal backing from his party's leadership committee to enter formal coalition talks. But some SPD bigwigs remain sceptical, including Kevin Khnert, head of the SPD's youth wing.

The party is "extremely wary of yet again playing second fiddle in a Merkel-led government" given the collapse in their support that ensued after the last CDU-SPD grand coalition. If the SPD's membership does reject talks, Schulz "would likely be forced to step down".

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The revival of the grand coalition may end up helping the far-right populist Alternative for Germany party, notes Darrell Delamaide in Handelsblatt,a German business newspaper. "As the biggest party in parliament that is not in the government, the Alternative for Germany would have a number of perks including more speaking time on the floor and chairmanship of the key budget committee."

Overall, this new status "may enable it to further extend its support", especially "if a new coalition just sits on its hands and creates the impression it hasn't learned anything".

Dr Matthew Partridge
MoneyWeek Shares editor