Word: merkel
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Germany's elections on Sept. 27 had more than one victor. Sure, German Chancellor Angela Merkel retained her grip on the post. But Guido Westerwelle, the head of the Free Democrats, was the real winner, becoming the first openly gay leader of a governing German party. Though Merkel's conservative Christian Democrats pulled in one-third of the vote - less than in 2005 - Westerwelle's party captured 14.6% of the ballots, a 4.7% increase that was the largest of any group. Germany will now be ruled by a coalition of the two parties. Following German tradition, Westerwelle is slated...
...pass 6% of GDP in 2010, thanks mostly to a dip in tax revenues. Some economists say the center-right government will be penned in. "There's no room for maneuver on tax cuts," says Professor Henrik Enderlein, from Berlin's Hertie School of Governance. "On the contrary, Merkel's new center-right government is likely to raise taxes, like VAT, in order to get Germany's public finances out of the red." (See pictures of the dangers of printing money in Germany...
...That won't please business leaders, who have welcomed the prospect of a new direction. "We want to work with the new government to make sure there's economic growth," said Hans-Peter Keitel, the President of the Federation of German Industries (BDI). That enthusiasm will disappear quickly should Merkel shy away from change. "I hope the new government will be good for business as Germany needs structural reforms," Volker Treier, the chief economist of the Association of German Chambers of Industry and Commerce told TIME. "We need a more flexible labor market, reforms of the social security system...
...Opel, while neglecting small and medium-sized firms - the famed "Mittelstand" which make up the backbone of the German economy. Westerwelle also called for controversial reforms to make it easier for firms to hire and fire workers and he proposed 400 spending cuts. That could lead to clashes with Merkel, who's spent the past few years defending Germany's social and labor protections. "I think Chancellor Merkel will continue to be middle of the road to appease the Social Democrats," Gustav Horn, the director of the Macroeconomic Policy Institute in Düsseldorf told TIME. "Labor market reforms...
...claiming victory, Merkel said she wanted to be a "Chancellor for all Germans, so Germany does better, particularly in a crisis." Most commentators have interpreted that statement as a signal to the FDP that it's the CDU who will make the big decisions. Merkel says her top priority will be to create jobs and get the economy back on track. The question of how that's best done is likely to define the new government...