German elections

http://www.ft.com/cms/s/0/ed855f80-ab99-11de-9be4-00144feabdc0.html?nclick_check=1

 

http://news.bbc.co.uk/1/hi/world/europe/8277526.stm

 

http://www.bloomberg.com/apps/news?pid=newsarchive&sid=acJ3MSClFL48

 

28^th of September 2009

 

A dream for all German entrepreneurs and big business came true; the new elected government is led in a coalition of Mrs. Merkel representing the CDU and Guido Westerwelle, party leader of the FDP. The new center-right government rather than the apprehensive big coalition makes it easier for the re-elected Angela Merkel to push her ideas through.

Even though the CDU won the elections, it was one of the worst results for them in history. However, this result was not nearly as dreadful as of the former coalition partner SPD, who only managed to get 23%. The most surprising thing however, was the success of the smaller parties, gaining massive percentages.

 

After giving a brief summary of the new situation in Germany, it is interesting to see how the different sources listed above conveyed the same message, in different ways. The financial times for example focuses on the reactions of CEO’s of the 30 biggest German companies. The tone of the author is very upbeat projecting, that the election results bring hope for the German economy, which is the largest in Europe, hence affecting the entire EU. However, the author does not cover the flip side of the situation, as for example how the promises made by the parties can be held.

 

The BBC article on the other hand gives a fairly good overview of the entire situation. It is still written in a bias manner, very pro Angela Merkel. Yet it states more facts than the financial times article.

 

The best-written and most comprehensive article is that of Bloomberg. It is very objective and easy to understand. A very good overview is given of the whole current situation. Furthermore, the author compares past results to current results and discusses issues that arise with the new government.

 

Speaking from a financial viewpoint the elections are the best thing that could happen to Germany. Both the CDU and FDP are supporters of low tax and give incentives to raise business activity. The problem however, that is being discussed at the moment is how will the government be able to cut taxes with a budget deficit. Tax is the highest form of income for a government. Germany is one of the largest exporters in the world and with the potential decrease in tax; this is a greater incentive for SMEs to grow through exports, as they become more competitive offering lower prices. The tax cut that is in discussion is enormous and will mean that companies would not be as cash restricted.

 

On the basis of what has been discussed I would conclude that the election results are possibly the start of a financial upswing for Germany and even more important for Europe. The stock markets also reacted positively to the results of the election, which are further indicators that we might possibly be getting out of the recession. However despite the good news of this week’s elections, Germany may not feel the benefits as fast as desired owing the downward pressure implications of the current global financial crisis.