SPD’s Ypsilanti seeks leftist support in Hesse

Reneging on a campaign promise, the head of centre-left Social Democratic Party in the German state of Hesse, Andrea Ypsilanti, is seeking to build a minority government tolerated by the hard socialist Left Party.

Published: 4 March 2008 17:25 CET

Ypsilanti agreed on Tuesday to begin negotiations with the environmentalist Greens over forming a so-called “red-green” minority government coalition, after January’s inconclusive state election in Hesse left no clear path to forming a government. During the state election race SPD Hessian party boss Ypsilanti made promises not to deal with The Left Party, which is an offshoot of the East German communist party.

“It could turn out that I won’t be able to keep the promise not to vote with The Left,” she said on Tuesday, according to German news agency DDP. She said the decision wasn’t easy, but it was more important to form a government based on the issues the SPD had promoted during the campaign.

The SPD could theoretically achieve a parliamentary majority in the Hesse with the pro-business Free Democrats (FDP) and the Greens, or build a grand coalition with the conservative Christian Democrats (CDU). But discussions across party lines have proven difficult, opening the way for a minority government tolerated by the hard-line socialist Left Party.

Ypsilanti said she was “very disappointed” with the FDP, who were her “preferred partner” for a coalition. But the FDP’s refusal to join a coalition with the Greens doesn’t mean she’ll shut the door on the party, she said.

Before the SPD’s first meeting with The Greens, the party will meet for further talks with the CDU. The chances of achieving a coalition with the CDU are small, though, Ypsilanti said. Such a coalition would be “enormously difficult,” she said according to DDP.

The issue of how to deal with the Left Party’s recent encroachment into western German state parliaments has wracked the SPD in recent weeks. After Social Democrat chairman Kurt Beck told state SPD party organizations they could forge their own alliances with the Left Party, his leadership has come under fire from more centrist SPD members.

Officials from the Left Party welcomed Ypsilanti’s announcement on Tuesday, as national party secretary Dietmar Bartsch said the socialists would “do our part” to help unseat Hesse’s incumbent conservative state premier Roland Koch.

Output is expected to expand 0.3 percent this year, the economy ministry said, up from a prediction of 0.2 percent in February.

The slightly rosier picture comes after improvements in key indicators — from factory output to business activity — boosted hopes a recovery may be getting under way.

The German economy shrank slightly last year, hit by soaring inflation, a manufacturing slowdown and weakness in trading partners, and has acted as a major drag on the 20-nation eurozone.

But releasing its latest projections, the economy ministry said in a statement there were growing indications of a “turning point”.

“Signs of an economic upturn have increased significantly, especially in recent weeks,” Economy Minister Robert Habeck said at a press conference.

The ministry also cut its forecast for inflation this year to 2.4 percent, from a previous prediction of 2.8 percent, and sees the figure falling below two percent next year.

“The fall in inflation will lead to consumer demand — people have more money in their wallets again, and will spend this money,” said Habeck.

“So purchasing power is increasing, real wages are rising and this will contribute to a domestic economic recovery.”

Energy prices — which surged after Russia’s 2022 invasion of Ukraine — had also fallen and supply chain woes had eased, he added.

Several months ago there had been expectations of a strong rebound in 2024, with forecasts of growth above one percent, but these were dialled back at the start of the year as the economy continued to languish.

‘Germany has fallen behind’

But improving signs have fuelled hopes the lumbering economy — while not about to break into a sprint — may at least be getting back on its feet.

On Wednesday a closely-watched survey from the Ifo institute showed business sentiment rising for a third consecutive month in April, and more strongly than expected.

A key purchasing managers’ index survey this week showed that business activity in Germany had picked up.

And last week the central bank, the Bundesbank, forecast the economy would expand slightly in the first quarter, dodging a recession, after earlier predicting a contraction.

German Economics Minister Robert Habeck

Economics Minister Robert Habeck (Greens) presents the latest economic forecasts at a press conference in Berlin on Wednesday, April 24th. Photo: picture alliance/dpa | Michael Kappeler

Despite the economy’s improving prospects, growth of 0.3 percent is still slower than other developed economies and below past rates, and officials fret it is unlikely to pick up fast in the years ahead.

Habeck has repeatedly stressed solutions are needed for deep-rooted problems facing Germany, from an ageing population to labour shortages and a transition towards greener industries that is moving too slowly.

“Germany has fallen behind other countries in terms of competitiveness,” he said. “We still have a lot to do — we have to roll up our sleeves.”

Already facing turbulence from pandemic-related supply chain woes, the German economy’s problems deepened dramatically when Russia invaded Ukraine and slashed supplies of gas, hitting the country’s crucial manufacturers hard.

While the energy shock has faded, continued weakness in trading partners such as China, widespread strikes in recent months and higher eurozone interest rates have all prolonged the pain.

The European Central Bank has signalled it could start cutting borrowing costs in June, which would boost the eurozone.

But Habeck stressed that care was still needed as, despite the expectations of imminent easing, “tight monetary policy has not yet been lifted.”

In addition, disagreements in Chancellor Olaf Scholz’s three-party ruling coalition are hindering efforts to reignite growth, critics say.

This week the pro-business FDP party, a coalition partner, faced an angry backlash from Scholz’s SPD when it presented a 12-point plan for an “economic turnaround”, including deep cuts to state benefits.

Christian Lindner, the fiscally hawkish FDP finance minister, welcomed signs of “stabilisation” in the economic forecasts but stressed that projected medium-term growth was “too low to sustainably finance our state”.

“There are no arguments for postponing the economic turnaround,” he added.