The German chancellor is forming a coalition with the pro-business FDP after her election win on Sunday.
Merkel victory puts SDP into opposition
The German chancellor, Angela Merkel set to work on Monday on a new centre-right coalition after clinching a second term, but warned Germans of a hard road ahead to revive the country's sickly economy and rescue jobs. The chancellor, leader of the right-wing Christian Democrats (CDU), secured another four-year mandate with enough votes to dump an awkward "grand coalition" with the Social Democrats (SPD) for an alliance with the pro-business Free Democrats (FDP).
Mrs Merkel said: "We know that we want to use this opportunity in an economically difficult time to save jobs, create new jobs and boost growth decisively. The chancellor, Germany's first female leader and its first from the former communist east, said: "I am very satisfied and happy with yesterday's results and intend to start the new legislative term full of momentum and energy. Voters on Sunday rewarded Mrs Merkel, 55, dubbed the most powerful woman on Earth by Forbes magazine for four years running, for shepherding Europe's biggest economy through its worst post-war downturn.
However the Tagesspiegel newspaper said the 33.8 per cent vote for the CDU and its Christian Social Union (CSU) ally, their worst since 1949, marked a "black eye" for the chancellor. It took the FDP's record 14.6 per cent score to give the alliance a majority in parliament. The FDP, champions of free trade and lower taxes will return to power for the first time since Helmut Kohl led Germany 11 years ago.
The FDP leader, Guido Westerwelle, aims to become the country's first openly gay foreign minister. He told a news conference that he would actively support the president of the US, Barack Obama, in his disarmament efforts and work to get Germany back on its feet with tax cuts despite mounting public debt. Mrs Merkel's bloc and the FDP have a comfortable 332 seats in the 622-member parliament. The chancellor and Mr Westerwelle were to meet on Monday, with the coalition expected to be formed within about a month.
The SPD, with Frank-Walter Steinmeier, the outgoing foreign minister, as candidate for chancellor, crashed to 23 per cent, its worst post-war result, and will be consigned to the opposition benches after 11 years in government. Mrs Merkel identified her top priority as tackling unemployment, which stands at 8.3 per cent but is forecast to surge in the months ahead, as firms lay off workers on part-time schemes.
Holger Schmieding, head of European economics at Bank of America Merrill Lynch in London, said the vote was "not a revolution". He forecast no dramatic changes but said: "There will be some tax reforms over the next four years, and there will probably be some move towards deregulation modestly in the labour market, and probably some changes in the health care system." Observers said victory was unlikely to change Mrs Merkel's low-key style or her preference for government by consensus. But it boosted her authority on the world stage, particularly among her allies.
The Times in London said: "Her strong mandate and Germany's steady emergence from recession will ensure that her views carry greater weight in both Paris and Washington, Berlin's two key alliance partners." On foreign policy, Germany's mission in Afghanistan is highly unpopular and could become a big domestic headache for Mrs Merkel if an insurgency in the north of Afghanistan, where its 4,200 troops are based, continues to escalate.
The deployment in Afghanistan prompted a series of threats from the leader of al Qa'eda, Osama bin Laden, and German-born extremists before the elections. * AFP