Firstly, whatever Merkel’s merits in a broader political sense, it is difficult to be impressed by her handling of the euro crisis, which has been characterized by rather nerve-wracking ‘just-in-time management’. In particular, the much too lengthy crisis in Greece – a country insignificant in an economic sense, but geographically (geopolitically) indispensable part of NATO on its southern flank – has been allowed to run completely out of control.
OK, Merkel gave an approving nod to ECB President Mario Draghi when he made his famous “whatever it takes” comment. But one of the consequences has been an overreliance on monetary policy. On the fiscal side, the Eurozone has turned into a larger Germany, with an impressively – some would say irresponsibly – large current account surplus. Under Merkel’s leadership, a chronic lack of sufficient aggregate demand has become a structural weakness of the Eurozone – a deflationary bias, as was feared by many economists when the Maastricht Treaty was signed.
Proposals by French President Emmanuel Macron to create a sufficiently large macroeconomic stabilization fund on a European level have been blocked by Merkel. As has the completion of a banking union and the creation of a deposit guarantee for the Eurozone. The architecture of the Eurozone remains dangerously incomplete and Merkel’s attitude has been reactive, defensive and cautious.
The new finance minister, the Social Democrat Olaf Scholz, has changed nothing. His lack of ideas has been impressive. We shouldn’t expect any exceptional initiatives from the Merkel-Scholz team. Secondly, there is broad consensus within the German electorate on the EU, NATO, the euro, the strategic importance of the Franco-German alliance and other matters. It is impossible to predict who will be the new chancellor: Merkel-clone Annegret Kramp-Karrenbauer – also known as ‘AKK’ – who like Merkel lacks “the vision thing”?
The pro-business Friedrich Merz, which would be interesting seeing that Germany has “too few answers to the proposals of Emmanuel Macron”? Or, much less likely, the CDU's young, openly gay and ‘burkaphobic’ anti-Merkel populist Jens Spahn? Whoever takes up the baton could never be as inclined to continue the current Reformstau (reform jam) on a European level. Every change would be an improvement, especially in the case of Merz.
Thirdly, we are highly likely to see general elections in Germany before the end of next year, prompted by the new CDU party leader or the increasingly unhappy coalition partner of the current government, the SPD. The meteoric rise of the center-left Greens in the polls is an interesting political development in Germany and makes a so-called ‘Jamaica coalition’ (black-blue-green: CDU/FDP/Greens) much more likely.
I would expect the Greens to be much less of a disappointment to Macron than the current SPD. Moreover, Germany would really fast-track implementation of its policy to reduce the economy’s dependence on coal (don’t be overly misled by all those windmills). There are reasons to be hopeful about political developments in Germany.
This column was originally published in the December edition of Robeco Quarterly
The content displayed on this website is exclusively directed at qualified investors, as defined in the swiss collective investment schemes act of 23 june 2006 ("cisa") and its implementing ordinance, or at “independent asset managers” which meet additional requirements as set out below. Qualified investors are in particular regulated financial intermediaries such as banks, securities dealers, fund management companies and asset managers of collective investment schemes and central banks, regulated insurance companies, public entities and retirement benefits institutions with professional treasury or companies with professional treasury.
The contents, however, are not intended for non-qualified investors. By clicking "I agree" below, you confirm and acknowledge that you act in your capacity as qualified investor pursuant to CISA or as an “independent asset manager” who meets the additional requirements set out hereafter. In the event that you are an "independent asset manager" who meets all the requirements set out in Art. 3 para. 2 let. c) CISA in conjunction with Art. 3 CISO, by clicking "I Agree" below you confirm that you will use the content of this website only for those of your clients which are qualified investors pursuant to CISA.
Representative in Switzerland of the foreign funds registered with the Swiss Financial Market Supervisory Authority ("FINMA") for distribution in or from Switzerland to non-qualified investors is ACOLIN Fund Services AG, Affolternstrasse 56, 8050 Zürich, and the paying agent is UBS Switzerland AG, Bahnhofstrasse 45, 8001 Zürich. Please consult www.finma.ch for a list of FINMA registered funds.
Neither information nor any opinion expressed on the website constitutes a solicitation, an offer or a recommendation to buy, sell or dispose of any investment, to engage in any other transaction or to provide any investment advice or service. An investment in a Robeco/RobecoSAM AG product should only be made after reading the related legal documents such as management regulations, articles of association, prospectuses, key investor information documents and annual and semi-annual reports, which can be all be obtained free of charge at this website, at the registered seat of the representative in Switzerland, as well as at the Robeco/RobecoSAM AG offices in each country where Robeco has a presence. In respect of the funds distributed in Switzerland, the place of performance and jurisdiction is the registered office of the representative in Switzerland.
This website is not directed to any person in any jurisdiction where, by reason of that person's nationality, residence or otherwise, the publication or availability of this website is prohibited. Persons in respect of whom such prohibitions apply must not access this website.