Angela Merkel’s victory in the German elections last night is both a triumph and a paradox. In 2005 she campaigned as an economic liberal but ended up in a coalition with the Social Democrats, which forced her towards the centre. This time around she campaigned as a centrist and a champion of the traditional German social market economy, and has ended up in a coalition with the economic liberals of the Free Democrats.
So the next question is will this new coalition finally free Merkel to be Merkel, and to push through the free-market policies that she put at the centre of her programme in 2005? Or has the chancellor really changed?
I think there are two big tests to look out for. First, tax cuts; both the CDU and the Free Democrats promised tax cuts – will they, can they, deliver? Second, what are they going to do about the Opel bail-out. Securing the future of a big car manufacturer was an important achievement for Merkel in the last days before the vote; but leading figures in the Free Democrats expressed misgivings about such a costly, anti-market measure. Whose views will prevail? Read more