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Merkel fourth term in doubt as German coalition talks fail

Efforts to form a three-way coalition government fail, thrusting Germany into a political crisis and pushing Europe's largest economy closer to a possible new election

Ersin Çelik
09:22 - 20/11/2017 Pazartesi
Update: 09:25 - 20/11/2017 Pazartesi
REUTERS
German Chancellor Angela Merkel
German Chancellor Angela Merkel

Failure to form a government in Europe's largest economy could have implications for everything from euro zone reforms championed by French President Emmanuel Macron to the shape of relations with Britain after it leaves the EU.

The next government was also expected to increase spending, raising hopes of more fiscal stimulus for an economy that has been relying on consumption and state spending for growth.

While campaigning for a fourth term, Merkel cited the strong performance of an economy that has been growing since 2010 and a record low unemployment rate as reasons for voters to back her conservatives.

Economists have accused her of complacency on the economy, saying she should overhaul the tax system to make it more growth-friendly and boost investment on digital infrastructure - demands also made by the FDP.

The DIHK Chambers of Industry and Commerce said a prolonged period of uncertainty would be bad for the economy.

"There is the danger that work on major issues for the future of our country will be delayed for a prolonged period of time," DIHK President Eric Schweitzer wrote in an email. "German companies must now prepare for a possibly long period of uncertainty. This is always difficult for the economy."

The break down of the talks came as a surprise, especially as it was announced by the resurgent FDP, Merkel's preferred coalition partners who had dropped out of parliament four years ago and had ruled with her conservatives during 2009-2013.

After its impressive electoral comeback, the FDP's decision to pull out of coalition talks was puzzling, according to Jackson Janes, of the American Institute for Contemporary German Studies at Johns Hopkins University.

"And it is also a dangerous game of poker for Germany," Janes added.

Immigration was the main sticking point in the negotiations. Merkel's Christian Democrats (CDU) and their Christian Social Union (CSU) Bavarian allies had demanded a yearly cap on the number of asylum seekers that Germany accepts each year, a measure rejected by the Greens.

There was also discord over conservative proposals to limit the right of some accepted asylum seekers to bring in immediate family members. Merkel said a compromise with the Greens on immigration had also been possible.

Government spending, tax cuts and climate policy had also been sticking points.

"Today there was no progress but rather there were setbacks because specific compromises were questioned," the FDP's Lindner said. "It is better not to rule than to rule the wrong way. Goodbye!"

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