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POLITICS

Scholz vows ‘new beginning’ for Germany as Merkel exits

Olaf Scholz became Germany's new chancellor on Wednesday after 16 years with Angela Merkel at the helm, pledging his centre-left-led coalition would offer a "new beginning" for Europe's top economy.

German Chancellor Olaf Scholz (R) leaves the Bundestag in Berlin.
German Chancellor Olaf Scholz (R) leaves the Bundestag (lower house of parliament) in Berlin on December 8, 2021, after his election as Chancellor. Photo: TOBIAS SCHWARZ / AFP

Scholz was officially named the country’s ninth post-war leader by President Frank-Walter Steinmeier, who urged him to “ensure that the pandemic does not keep us firmly in its grip for another year” as a fourth wave of the coronavirus outbreak rages.

The former Finance Minister, who won 395 of the 707 votes cast in the Bundestag lower house, has vowed broad “continuity” with the popular Merkel
while making Germany greener and fairer.

READ ALSO: Scholz won’t revolutionise Germany – but change is welcome after Merkel

Asked by parliament speaker Bärbel Bas whether he accepted the election, a beaming Scholz removed his black corona mask to say “yes” and then received bouquets of flowers from all parliamentary groups except the far-right AfD.

Scholz led his Social Democrats to victory in the September 26th election – an outcome considered unthinkable at the start of the year given the party’s then festering divisions and anaemic support.

The 63-year-old, who turned emulating Merkel in style and substance into a winning strategy, has now cobbled together Germany’s first national “traffic light” coalition with the ecologist Greens and the liberal Free Democrats, nicknamed after the parties’ colours.

Their four-year pact sealed late last month is called “Dare for More Progress”, a hat tip to Social Democratic chancellor Willy Brandt’s historic 1969 pledge to “Dare for More Democracy”.

“We have a chance for a new beginning for Germany,” Scholz told his party at the weekend as it gave its blessing to the coalition agreement with 99-percent support.

New German Chancellor Olaf Scholz fist bumps the Greens' Robert Habeck.
New German Chancellor Olaf Scholz fist bumps the Greens’ Robert Habeck, who is set to be sworn in as Vice-Chancellor during the chancellor vote. Photo: picture alliance/dpa | Michael Kappeler

The alliance aims to slash carbon emissions, overhaul decrepit digital infrastructure, modernise citizenship laws, lift the minimum wage and have Germany join a handful of countries worldwide in legalising marijuana.

French President Emmanuel Macron congratulated Scholz, pledging “we will write the next chapter together” while EU chief Ursula von der Leyen said she looked forward to cooperation for a “strong Europe”.

Scholz’s office announced his first official visit would take him to Paris and Brussels Friday for talks with Macron, von der Leyen and NATO chief Jens Stoltenberg.

Vladimir Putin said Russia was offering “constructive ties” with the new government, while China’s Xi Jinping said Beijing was willing to work with Scholz to “promote bilateral ties to a new level”.

Gender balanced

The new Foreign Minister, Annalena Baerbock, has also pledged a tougher line with authoritarian states such as Russia and China after the business-driven pragmatism of the Merkel years.

Greens co-leader Baerbock is one of eight women in Germany’s first gender-balanced cabinet.

“That corresponds to the society we live in – half of the power belongs to women,” Scholz, who describes himself as a “feminist”, said this week.

Scholz and his team promise stability just as France braces for a bitterly fought presidential election next year and Europe grapples with the enduring aftershocks of Brexit.

READ ALSO: 

However a vicious fourth Covid wave has already put the incoming coalition to the test.

“We have to make a fresh start while facing down the corona pandemic – those are the circumstances the new government is up against,” Scholz told reporters Tuesday, flanked by his designated finance and economy ministers, Christian Lindner and Robert Habeck.

More than 103,000 people have died with coronavirus in Germany while new infections have surged since the weather turned cold, filling intensive care units to the breaking point.

Scholz has thrown his weight behind Germany following Austria in making jabs mandatory to get the pandemic under control, as experts say the worst is still to come for the country’s struggling clinics.

He aims to have parliament vote on the issue before the year is out with a view to implementing the law in February or March.

READ ALSO: Germany’s traffic light parties sign new coalition agreement in Berlin

‘Lessons of history’

Merkel, 67, Germany’s first woman chancellor, is retiring from politics after four consecutive terms, the first post-war leader to step aside of her own accord.

Outgoing chancellor Angela Merkel waves during the election of Olaf Scholz as the new chancellor.
Outgoing chancellor Angela Merkel waves during the election of Olaf Scholz as the new chancellor in parliament on Wednesday. Photo: picture alliance/dpa | Michael Kappeler

Macron tweeted his gratitude to the outgoing leader.

“Thank you, dear Angela, for never forgetting the lessons of history, for having done so much for us, with us, to move Europe forward,” he said.

QUIZ: How well do you know Angela Merkel?

She leaves big shoes to fill, with large majorities of Germans approving of her leadership, even if her own party, the conservative Christian Democrats, often bridled against her moderate course.

Despite being from a rival party, Scholz tapped into that well of popular support in his bid to succeed Merkel while pledging to tackle the widening gap between rich and poor under her.

Meanwhile, Greens supporters are banking on billions flowing toward climate protection and renewable energy, even as the government pledges to return to a no-new-debt rule by 2023.

By Deborah COLE
 

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ECONOMY

‘Turning point’: Is Germany’s ailing economy on the road to recovery?

The German government slightly increased its 2024 growth forecast Wednesday, saying there were signs Europe's beleaguered top economy was at a "turning point" after battling through a period of weakness.

'Turning point': Is Germany's ailing economy on the road to recovery?

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.

READ ALSO: Can Germany revive its struggling economy?

“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.”

READ ALSO: Which German companies are planning to cut jobs?

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.

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