Merkel Charges Successor With Modernizing Germany’s Economy
(Bloomberg) -- Angela Merkel said that the next German chancellor will have to pick up the pace of technological progress to ensure Europe’s biggest economy can remain competitive in the digital age.
Speaking at an extended press conference Thursday before what will be her last summer break as German leader, Merkel said that the next government will have to do more to digitize the public sector, help businesses take advantage of cutting edge technology and accelerate the effort to eliminate carbon emissions.
Microphone malfunctions in the press room underlined the fact that for all its engineering prowess, Germany still struggles with the basics at times.
“We could be better,” Merkel said. “There’s a lot to do.”
While Merkel has seen solid economic growth add more than 5 million jobs during her 16 years in office, she’s stepping down at a time of when questions are mounting about the country’s future. The fabled German car industry is wrestling with the end of combustion engines and competition from the likes of Tesla, the German tech industry lags behinds its European rivals and manufacturers are fretting about the cost of the energy transition.
The chancellor, who met with President Joe Biden in Washington last week, said that she had taken note of U.S. plans to spend some $250 billion on technology research, including chip development.
”We’re a strong country and have shown that during the coronavirus crisis,” she said. “But we have work to do in several areas to maintain the standard that we have and the world is developing with an incredible dynamic.”
Merkel’s CDU remains on track to lead the next government, but the devastating floods that have battered the country over the past week have shifted the dynamic in the election campaign. Conservative front-runner Armin Laschet damaged his efforts when he was caught laughing on camera in the midst of the catastrophe.
Laschet’s conservative bloc topped the latest poll from Forsa on 28%, nine points ahead of the Greens, in the first survey to gauge voters’ reaction to the flooding. A week earlier, Laschet had been leading by 11 points.
The country’s first woman leader and the first from formerly communist East Germany has won four straight German elections as head of the center-right Christian Democrats. If the coalition negotiations following September’s vote stretch on past Christmas, she’ll surpass Helmut Kohl to become Germany’s longest-serving postwar chancellor.
Her last victory, in 2017, was strained by a lackluster result six months of tumultuous talks before she could form a government with the Social Democrats. In 2018, after political fight over refugees that nearly brought down her administration, she announced she wouldn’t run again as CDU party chairwoman or chancellor.
Merkel has done much to tout her ambitious climate agenda, and in her first term she was dubbed “the green chancellor” (she was environment minister in the 1990s). But her record is more mixed.
In 2011, she was forced to reverse a nearly-complete plan to extend nuclear energy by a decade in the fallout of the Fukushima disaster in Japan. Her 2019 plan to reduce greenhouse gas emissions by 55% by the end of this decade ran into opposition from climate activists and the opposition, who said it wasn’t ambitious enough.
“A number of things are in effect, but much has to go faster,” she said Thursday.
Similarly, she did little to encourage German automakers to embrace the shift to electric motors until the diesel scandal of 2015 forced their hand.
One of the biggest questions looming over the post-Merkel era is how involved the new government will be in driving the country’s economy. Merkel pursued a balanced-budget regime, known as the Black Zero -- often praised by supporters before the pandemic as it drove debt levels far below those of Germany’s peers.
Yet she also often faced criticism for not making better use of fiscal space when the economy could afford it. With the pandemic, budget restraint was largely tossed aside as Merkel’s government spent hundreds of billions of euros to keep jobs and companies afloat amid lockdowns. The question now is whether to reinstate it.
Compared to its European neighbors, Germany’s economy fared relatively well throughout the crisis, largely due to massive government support. The question is how businesses will fare once aid is withdrawn.
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