ibusinesslines.com September 23, 2018

Angela Merkel's party reaches breakthrough in German coalition talks

13 January 2018, 04:38 | Erica Roy

Angela Merkel's party reaches breakthrough in German coalition talks

Angela Merkel's party reaches breakthrough in German coalition talks

Left party chairwoman Sahra Wagenknecht said the deal would perpetuate "blatant social injustice", including Germany's precarious low-wage sector and poverty in old age, while business raked in "gushing dividends".

German Chancellor Angela Merkel's conservative party grouping and Social Democrats (SPD) toiled deep into the night on Thursday to overcome differences on tax cuts and other issues that threatened to block a new "grand coalition" government.

The leader of that social-democratic party, the horrendous Martin Schulz, said at the end of a year ago that he hoped for a "United States of Europe".

Considered a potential breakthrough on a new grand coalition following months of political uncertainty, the document could nevertheless be changed before the start of the formal talks. The Social Democrats must also put the agreement to their members, an obstacle that all three party leaders acknowledged Friday morning.

He said his party wanted to ensure that the new government was committed "above all to working toward renewal of the European Union".

September's inconclusive elections left Merkel without a majority for a fourth term and struggling to find partners to govern with. That decision was popular with members.

The conservatives also performed poorly in the election, and the three coalition parties' support dropped by a total of almost 14 percentage points.

They also said Germany would from this year study ways to phase out dirty coal plants, without however setting a target date so far.

The paper also showed the parties would set up a German-French centre to develop artificial intelligence.

But both parties bled support in the September 24 election, which saw the far-right Alternative for Germany (AfD) enter the Bundestag lower house of parliament for the first time.

Friday's agreement states that the number of new asylum-seekers shouldn't exceed a range of 180,000-220,000 annually. In addition, following the passage of a new law next summer, up to 1,000 family members of refugees per month would be allowed to come to Germany. The party has called for a "United States of Europe" by 2025 - a step too far for the conservatives who do not want to risk German taxpayers' money.

And to fund that, it wants the top tax rate to be raised to 45 per cent from the current 42 per cent.

Merkel highlighted promises to hire 15,000 more police officers and 2,000 people to strengthen the justice system. Both parties agreed earlier this week to abandon Germany's goal of cutting its carbon emissions by 40%, from 1990 levels, but 2020.

Rachel Tausendfreund from the German Marshall Fund think-tank noted however that a deal may be the best option, not only for Germany but also for Europe, particularly if the SPD manages to extract key compromises on European Union and social welfare reforms. The main policy points they've agreed on are: strengthening and reforming the 19-member euro zone (including paying more into the European Union budget); capping refugee intake to 200,000 per year; and not increasing taxes.

Merkel now leads a caretaker government, limiting her ability to take major policy initiatives as French President Emmanuel Macron pushes an ambitious European reform agenda.

Italian Prime Minister Paolo Gentiloni commented via Twitter that the agreement between Merkel and Schulz was "a good item of news for Europe".

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