Merkel

Michael Steen

(Getty)

The first official German election results are in and Angela Merkel’s Christian Democrats enjoyed a huge swing in the polls, but remain five seats short of achieving the first absolute majority since 1957.

That fires the starting gun for coalition talks, raising some interesting questions, especially after the chancellor’s existing coalition partner, the liberal Free Democratic Party, has crashed from its best-ever election result in 2009 to parliamentary annihilation, failing to reach the five per cent threshold. 

Michael Steen

Peer Steinbrück, the Social Democratic Party challenger hoping to unseat Angela Merkel, German chancellor, had everything to fight for. A live 90-minute TV debate broadcast on four of the biggest TV stations to an audience estimated at 15m just three weeks before election day. The “duel” has been the most keenly anticipated election event in the campaign to date.

So did the man who served as Ms Merkel’s finance minister in a previous coalition government from 2005-2009 land any real punches? 

Michael Steen

(Getty Images)

The mark of a truly skilled politician is to make any possible source of weakness or fallibility look exogenous. Angela Merkel can do it with her eyes closed.

Faced with hard questions about what her government knew and when about US surveillance operations that may have harvested the private data of millions of Germans, the chancellor walked into her last press conference before the parliamentary summer break and managed to sound solicitous about getting to the bottom of the issue – which, of course, had nothing to do with her.

No matter that the opposition Social Democratic party are doing their best to turn widespread public concern about mass surveillance into questions about Ms Merkel’s leadership ahead of the September 22 general election. No matter the accusations that Germany’s own spooks were actively colluding with the US National Security Agency. And no matter that, thus far, the US appears to have done next to nothing to soothe German nerves.

 

Gideon Rachman

One of this morning’s reports from the EU summit is headlined – “David Cameron fails to cut EU bureaucrats pay and perks“. With the EU budget talks collapsing on Friday afternoon, it appears to be true, at least for now. And it’s a great shame. I know that sentiment will deeply irritate my friends in the EU bureaucracy – some of whom have been emailing me to point out that spending on administration is a mere €6bn a year, which is less than 6% of total EU spending. Even so, there is plenty of waste in the EU budget that could be easily sliced away.

What is true is that one element of Cameron’s approach – which is to suggest a 10% cut in the budget for pay – is potentially too crude. Not all EU operatives are overpaid. Some of the lawyers, for example, have relatively modest salaries by private-sector standards. Rather than an across-the-board cut in pay it would be much more productive to start eliminating entire agencies, functions and perks. This would cut the payroll and the budget, while preserving the bits of the EU that actually do something useful. Here are some candidates for the chop. 

Tony Barber

Add Poland to the list of European Union countries turned off by the incoherent, self-isolating policies of Britain’s Conservative-led government towards Europe.

First there was Germany. Chancellor Angela Merkel restricts her visits to the UK these days to the barest minimum. She has been lukewarm about David Cameron, the UK prime minister, ever since he pulled the Conservative party out of the pan-European centre-right European People’s Party (EPP), of which her Christian Democrats are a leading light.

Next came France. President François Hollande hasn’t forgotten how Cameron refused to meet him when he visited London on an election campaign trip earlier this year. Hollande is not inclined to do Cameron any favours on crucial issues such as the protection of British interests in a more deeply integrated Europe. 

Tom Burgis

Welcome to our rolling coverage of the eurozone crisis. German judges have ruled in favour of the eurozone’s rescue plans – albeit with conditions, Dutch voters are going to the polls and Brussels publishes plans for eurozone-wide banking supervision. By Tom Burgis, John Aglionby and Ruona Agbroko on the London  newsdesk with contributions by FT correspondents around the world. All times are BST.

16.51 That’s a wrap for our live coverage of a big day in the eurozone. The message of the past week seems to be: all hail the ECB. See ft.com for more news and analysis through the evening. We leave you with a last summary of the market mood from Ralph Atkins, the FT’s capital markets editor.

Markets have reacted positively to today’s news but it had largely been priced-in – the party took place last week. Spanish 10 year bond yields which have fallen by some 200 basis points since late July dropped a further six points. Spanish two year bonds were down 10 basis points. Shares rose initially, but the FTSE Eurofirst 300 index is closing more or less unchanged at 1108.0.

16.26 In Frankfurt, FT bureau chief and eurozone economics guru Michael Steen has been assessing the impact for the ECB of moving into the murky world of banking regulation.

By taking on oversight of eurozone bank supervision, the ECB can at best hope to prevent situations arising in which a bank needs to be bailed out and its depositors repaid. But, as people inside the ECB have themselves acknowledged, supervision is very far removed from the intellectual world of setting interest rates.

“When you deal with banks, you deal with politics. Automatically,” one senior ECB official said. “It’s very dangerous.”

The full piece is coming soon to ft.com/europe 

Esther Bintliff

José Manuel Barroso (R), who is set to unveil plans for a "banking union" on September 12, shown here in talks with German Chancellor Angela Merkel in June.

In times of crisis, a fast-forward button can be pressed on decisions that would usually take years of discussion and planning. So it is with the creation of a European ‘banking union’, which analysts at the Bruegel thinktank describe as an endeavour “in some respects no less ambitious and complex than the creation of monetary union itself”. The aim is to brace eurozone banks against future shocks by bringing them under a common regulatory and supervisory structure, introducing common deposit insurance and a shared system for crisis resolution. In June, José Manuel Barroso, president of the European Commission, told the FT he’d like to enact a banking union as soon as 2013. But is that really feasible? And what hurdles stand in the way?  

Gideon Rachman

While it must be tempting for Cameron to score cheap points off the French government and to lecture the Germans, it is also distinctly ill-advised, argues Gideon Rachman 

Gideon Rachman

Angela Merkel’s speech to parliament in Berlin today marks a distinct shift in tone, argues Gideon Rachman. 

Esther Bintliff

Spain’s prime minister Mariano Rajoy, speaking in parliament today [our emphasis]:

“The next European Council on June 28 and 29 must launch a clear and decisive message on the irrevocability of the euro and the single market.”

But this is what Angela Merkel had to say last week, according to Spiegel.de:

“I don’t think that there is a single summit at which the big design will appear,” she said on ARD.