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By Madeline Chambers
BERLIN (Reuters)

Largely unperturbed by Angela Merkel‘s failure to form a government after a September election, many Germans are taking the prospect of several more months of coalition talks in their stride

The country is used to lengthy transitions but this is the longest since reunification in 1990. It is 87 days since the election and few experts see a government in place before March.

EU leaders fear delays to euro zone integration plans, some of which are to strengthen the banking system, and many economists warn Europe’s biggest economy must reform and invest in broadband and infrastructure to stay competitive.

 

A general view of the Christmas market on the square in front of the world famous gothic cathedral in Cologne
A general view of the Christmas market on the square in front of the world famous gothic cathedral in Cologne, Germany, November 28, 2017. REUTERS/Thilo Schmuelgen/

 

But as caretaker chancellor, Merkel is voting at EU summits, parliament is passing laws required by international mandates, local authorities are wading through asylum applications and a bright outlook in Europe’s biggest economy is buoying the mood.

“I haven’t noticed much difference from before,” said Nadja Helling, 36, cradling a steaming mug of gluehwein at a Berlin Christmas market. “It’s not ideal but nobody is panicking.”

Domestic and foreign demand are driving solid growth and the effects of low borrowing costs and European Central Bank stimulus are supporting record-high employment levels and rising real wages.

 

“We have jobs and are enjoying the Christmas markets,” said Helling’s friend, Silvia. “What’s the problem?”

 

 

The Munich-based Ifo institute raised its forecasts last week and expects the German economy to expand by 2.6 percent next year, the highest rate since 2011, adding, however, that this might be the peak.

The IfW institute in Kiel said the delayed formation of a government “does not pose an economic risk“, but also sounded a warning for the longer term.

“A boom may feel good but it carries the seeds of a crisis. The view that a boom is harmless, as long as consumer prices are under control, falls short,” said the IfW’s Stefan Kooths.

 

LITTLE SENSE OF CRISIS

The reality experienced by many Germans belies dire warnings from commentators last month about looming instability and even new elections after Merkel, weakened by losing votes to the far-right, was humiliated by the collapse of 3-way coalition talks.

She is now wooing the Social Democrats (SPD), reluctant partners after voters punished them for sharing power with Merkel’s conservatives over the last four years.

Germany’s transition pales into comparison with some other EU partners, such as Belgium and the Netherlands where a coalition took 225 days to clinch a deal this year

“I suspect the process will take some time yet but people who talk about instability are mistaken. We have a stable caretaker government, an effective parliament and a democracy that is functioning very well,” said Nils Diederich, politics professor at Berlin’s Free University.

 

Keep reading …

 

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