The third coming

Merkel's gigantic coalition is unlikely to change much for the EU where fiscal discipline is concerned.

Angela Merkel's confirmation as chancellor for a third term came after Germany's longest coalition talks since World War II. If that's a testament to the complex mechanics of democratic politics in the EU's powerhouse, it also bears out the trust reposed in Merkel by the electorate — albeit in part because there's no alternative. Now that the Bundestag has its chancellor, the grand coalition of the centre-right Christian Democratic Union/ Christian Social Union (CDU/CSU) and the centre-left Social Democratic Party (SPD) will have to rush back to business at a time when Berlin's reputation of being an economic bully has become firmer in other EU capitals.

The new government will tilt a little to the left of Merkel's previous administration because of the SPD. However, Germany is unlikely to soften its stand on fiscal discipline. For, at the heart of the grand coalition is Merkel's most trusted ally, Wolfgang Schaeuble, the finance minister behind the austerity imposed on crisis-hit EU states. Given the coalition's 504 seats out of 631 in the lower House, there's little scope for debate. Instead, SPD ministers will spend their time fighting CDU ministers, or mostly Schaeuble, accused by the SPD of being too beholden to the textbook in dealing with Greece. On the other hand, the SPD is likely to be tougher on the UK as the latter renegotiates its relationship with the EU. Merkel would do her best to keep London in, but she won't be able to offer David Cameron the best deal. She will also have to take stock of a Ukraine split down its middle by protests demanding proximity to the EU, and deal with Moscow's ire.

Once seen as the epitome of industrial efficiency, Germany's ageing infrastructure is deprived of repair and replenishment today owing to Berlin's pursuit of thrift at home. Experts warn this could undermine the economy in the long term. Merkel's first task, economists agree, is stimulating the domestic economy.

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