Angela Merkel, Germany’s chancellor and Christian Democratic Union (CDU) leader, center, waves to the crowd during a campaign event in Aachen, Germany (Photographer: Jasper Juinen/Bloomberg)

Merkel's Hand Strengthened by German Voters Ahead of Summits

(Bloomberg) -- Chancellor Angela Merkel is picking up a tailwind for Germany’s election in September, strengthening her position at home and on the global stage ahead of a series of summits with fellow leaders including President Donald Trump.

Written off last year for her open-border stance on refugees, Merkel is clawing back when it counts. Her party’s election victory in Germany’s most populous state on Sunday highlights her pull among voters as Merkel vows to hold the European Union together, defends for free trade and rebuffs Trump’s pressure to accelerate defense spending. Merkel plans to hold a news conference Monday at about 1 p.m. in Berlin, before hosting French President Emmanuel Macron for their first meeting after his inauguration.

“Almost everybody in Europe expects that Merkel will stay in power,” Famke Krumbmueller, a partner at political-risk consultancy OpenCitiz, said by phone. For European peers such as Macron, that means “he can be pretty sure now that he will have to deal with Angela Merkel in the next four years.”

After Macron’s victory in France, the decisive win by Merkel’s Christian Democrats in the German industrial heartland of North Rhine-Westphalia is another setback for the populists who propelled the U.K. out of the European Union and Trump into the White House. After 12 years in office, it confirms Merkel’s standing before she heads to the North Atlantic Treaty Organization and Group of Seven summits in Brussels and Sicily next week.

Merkel's Hand Strengthened by German Voters Ahead of Summits

Four months before the German election, an economic boom is buoying the national mood as the refugee crisis that depressed Merkel’s approval ratings last year recedes. Europe’s biggest economy expanded at the fastest pace in a year last quarter.

“Germany is so rock-solid economically and politically,” Erik Nielsen, global chief economist at UniCredit, said in an interview. “It’s not so surprising that the sitting government is doing well -- which is to mean the chancellor, they’re the bigger party -- when you have almost-record low unemployment, a very strong economy and a dangerous world outside.”

Social Democratic candidate Martin Schulz, who’s challenging Merkel on a platform of greater income equality, saw his party suffer its third straight defeat in regional voting in the last test before the national election on Sept. 24.

Support for the SPD fell to 31.2 percent, the lowest since World War II in a traditional stronghold, while the Christian Democrats took 33 percent, a gain of 6.7 percentage points, according to official results. In an echo of Merkel’s second-term coalition at the national level, the CDU can now form a state government with the pro-market Free Democrats, who surged 4 points to 12.6 percent.

The anti-immigration Alternative for Germany, once polling as high as 13 percent, won its first seats in the state assembly with 7.4 percent. Nationally, polls put Merkel’s Christian Democrat-led bloc ahead of the SPD by as many as 10 percentage points.

Merkel's Hand Strengthened by German Voters Ahead of Summits

“Merkel could not have hoped for a better basis to win a fourth term in office,” Holger Schmieding, chief economist at Berenberg, said in a note to clients. “Anti-European populism seems to have peaked in the euro zone.”

Schulz, a former European Parliament president, led the SPD to a surge in the polls after his nomination in January, only to see support fizzle in regional elections. While he acknowledged a “whopping defeat” in his home state, he vowed to fight on.

“We are confident because we believe we have the better program, the right program for the future,” Schulz told supporters in Berlin on Monday. “Sometimes a boxer gets a punch to the gut, but that doesn’t mean the next round goes to the opponent. For the next round, someone like me is steeled in battle.”