Merkel Opens Attack on Election Challenger Over Economic Policy

(Bloomberg) -- German Chancellor Angela Merkel publicly took aim at her main election challenger’s campaign proposals, suggesting for the first time that they would weaken Europe’s biggest economy.

Addressing members of her Christian Democratic Union in her parliamentary district on Germany’s Baltic coast, Merkel signaled an emerging line of attack against Martin Schulz, the Social Democrat who has lifted his party to multiyear highs in polls since announcing his candidacy for chancellor in January. Without naming Schulz, she criticized his call to reverse some of the cuts in social programs pushed through under her predecessor, Gerhard Schroeder, a Social Democrat whom she pointedly praised in her speech.

“The Social Democrats don’t want to embrace this success story,” Merkel told the meeting in Stralsund, Germany, on Saturday. “They’re even ashamed of it. This is the concept that opened a bigger pathway into the labor market for people.”

Picking a fight over Schroeder’s overhaul of the labor protections and jobless benefits more than a decade ago suggests Merkel is seeking to exploit lingering divisions between the SPD’s labor wing and economically centrist Social Democrats as she seeks a fourth term in elections on Sept. 24. Germany needs to consider tax incentives for research and development by midsize companies, she said Saturday.

“We shouldn’t be grousing about the Agenda 2010,” Merkel said. “We should be thinking about an Agenda 2025.”

SPD’s Surge

Backed by steady growth during most of her third term and unemployment at the lowest levels in a quarter century, Merkel is likely to run in part on her record of economic stability and defending global trade against protectionism, including calls for tariffs by U.S. President Donald Trump.

“We have to make it clear once again that Germany was founded on certain values,” she told her supporters.

Merkel, in office for more than 11 years, has said this year’s election will be her toughest yet. Polls that suggested the SPD was trailing Merkel’s CDU-led bloc by as many as 18 percentage points over the past year now put support for the Social Democrats at 29-33 percent, compared with 31-34 percent for her CDU/CSU.

Merkel, 62, used the speech to push back against the anti-immigration Alternative for Germany party, which is running a local challenger for the parliamentary seat she’s won in every general election since 1990. Polls suggest the party, known in Germany as AfD, would take as much as 11 percent of the vote if elections were held now.

“Everyone who lives in our country is ‘the people,”’ she said. On Election Day, “I would be very happy if we come out strong enough so that I can be chancellor for another term.”

To contact the reporter on this story: Arne Delfs in Stralsund, Germany at adelfs@bloomberg.net.

To contact the editors responsible for this story: Alan Crawford at acrawford6@bloomberg.net, Tony Czuczka, Steve Geimann