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| Germany's choices will effect all of Europe. 360b / Shutterstock.com |
Before the recent German election, many were speculating on
what Germany’s future looked like. A lot was hinged on the election, which was
a battle between incumbent Chancellor Angela Merkel of the Christian Democratic
Union (CDU) and Peer Steinbruck of the Social Democratic Party (SDP). Merkel
won the election handily, becoming the only major European leader to win
re-election twice since the 2008 global financial crisis. Merkel is widely
considered the most powerful politician in Europe, and this recent election
demonstrates just that.
KKR’s Global Institute, headed by leaders like David Petraeus (KKR Global
Institute Chairman) and Ken Mehlman (Global Head of Public Affairs),
surmised that the election would have effects on “the future of the continent,
including the process of economic integration within the Eurozone, the
deepening of the European internal market, and the conclusion of trade
agreements.” Those factors are likely to effect European investors in the
coming years.
These effects are expected to be felt throughout Europe,
though it looks as if Germany is increasing internal focus. Merkel’s
conservatives are currently in talks with the Social Democrats over a possible
coalition, which would focus on issues like Germany’s social system, fair
wages, job creation, and more. The two parties have historically been rivals,
and a coalition between the two would likely be supported by many German
citizens.
But the Social Democrats are hesitant to form this “grand
coalition” between the two most powerful parties. “We are in an extremely
difficult situation,” said
SDP party member and governor of Lower Saxony, Stephan Weil. “We need to
agree on a course for the Social Democrats in the coming years, and that will
involve a lot of wrangling tonight, but I expect there will be a clear
decision.”
The world is watching Germany and Ms. Merkel closely.
Germany currently has the fourth most powerful economy in the world and is
creditor to many smaller countries in Europe. Next moves haven’t yet been
solidified, but as KKR surmises, Merkel’s decisions will have a serious effect
on investors’ decisions in the coming years.
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