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world newsSaturday 13 January 2018
Investors cheer German deal, but some bemoan lack of vision
By DAVID McHUGH
AP Business Writer
FRANKFURT, Germany (AP)
— Hopes for a new govern-
ment in Germany sent the
euro and markets higher
Friday on relief that the
Europe’s biggest econo-
my might soon get stable
leadership. But it left some
economists and business
lobbyists saying it offers too
little to support the coun-
try’s prosperity over the lon-
ger term.
Friday’s tentative deal to
open formal coalition talks
would see Chancellor An-
gela Merkel’s Christian
Democrats, the allied Ba-
varia-only Christian Social
Union and the center-left
Social Democrats continue
their coalition. The agree-
ment follows the collapse
of a proposal for Merkel’s
party to govern along with
the Greens and pro-busi-
ness Free Democrats.
One primary reason for in-
vestors’ cheer — which
saw the euro jump to a
three-year high of $1.2156
against the dollar — was
simply relief that the coun-
try’s political situation was
being sorted out, almost
four months after the Sept.
24 election.
It seems likely that Merkel, a
known quantity for investors
and a firmly pro-European
politician, will remain chan-
cellor.
Also, the deal avoids the
risk of another election,
which would have raised
the prospect of more gains
New eurozone chief Centeno wants closer unity, fewer crises
PARIS (AP) — The euro-
zone’s new leader says he
hopes to use his term to
bring the 19 countries that
use the currency closer
together and make them
more resistant to crises.
Outgoing leader Jeroen
Dijsselbloem of the Neth-
erlands formally handed
over power Friday of the
eurogroup — in the form of
a symbolic bell — to Portu-
gal’s Mario Centeno in a
ceremony in Paris. Cente-
no’s mandate starts Satur-
day. “A lot has been done.
We exited the crisis. But we
have to face it, the job is
not yet complete,” Cen-
German Chancellor Angela Merkel is flanked by Bavarian governor Horst Seehofer, left, and specifics: “What is lacking
is a vision of in what direc-
Social Democratic Party Chairman Martin Schulz as they arrive for a joint statement after the tion a future government
will shape our country.”
exploratory talks between Merkel’s conservative bloc and the Social Democrats on forming a He said the proposals rep-
resented a “minimum” of
new German government in Berlin, Germany, Friday, Jan. 12, 2018. possible steps and urged
more definite proposals on
(Bernd von Jutrczenka/dpa via AP) areas such as the digital
economy.
by populist parties such Merkel’s conservatives after suffering substantial The deal includes a strong
statement in favor of
as the far-right AfD. Ana- and the Social Democrats losses in the election. strengthening the Europe-
an Union, including steps
lysts have singled out the include a promise not to The plan has some increas- to make the eurozone
currency union function
rise in populist, euroskeptic increase taxes, some flex- es in social spending, such better. That could include
transforming the current
parties in many countries ibility on reaching a com- as a 25 euro per month rise European Stability Mecha-
nism bailout fund into a
as one of the key risks to mitment to cut greenhouse in child benefit, along with full-fledged European Mon-
etary Fund to help back-
growth and markets in Eu- gas emissions by 40 per- a decrease in the so-called stop crisis-hit countries.
There was also mention of
rope. Several such parties cent by 2020, and a willing- solidarity tax imposed to targeted investment that
could “serve as the point of
want to weaken the euro ness to work with France on help the former East Ger- departure for a eurozone
investment fund.”
ties or break up the cur- steps to fix chronic flaws in many catch up with the The euro currency’s lack
of a central fiscal pot to
rency bloc altogether, with the shared euro currency. west. even out recessions has
been identified as one of its
uncertain consequences Friday’s deal was only an Kempf welcomed the flex- weaknesses. The currency
union was threatened with
for the region’s economies. agreement to open full- ible approach to cutting breakup in 2011-2012 dur-
ing a crisis over too much
“The agreement is over- fledged coalition talks that greenhouse emissions, say- debt in several member
countries. Germany has re-
due,” said Dieter Kempf, should produce a more ing that “there are grounds sisted fiscal sharing out of
concern that it would wind
president of the Federa- detailed policy map for the for hope that technical and up funding other countries
on a long-term basis.
tion of Germany Industries next government. A deal economic realities will be There was no mention of
other fixes such as EU-wide
lobby. “Germany urgently must also be approved by more clearly recognized.” deposit insurance or efforts
to promote cross-border in-
needs a government ca- the Social Democratic rank He also welcomes the vestment holdings, dubbed
capital markets union. q
pable of taking action.” and file, who have been promise not to raise taxes,
The most important points skeptical about joining with yet said that the 28-page
in the agreement between the conservatives again document was short on
teno said at the ceremony, Outgoing leader Jeroen Dijsselbloem, left, of the Netherlands at the forefront of fighting
describing a “window of debt crises in recent years.
opportunity” to deepen smiles after handing over power of the so-called eurogroup to Centeno takes over at a
monetary union. “It is very time when the eurozone is
important to meet our citi- Portugal’s Mario Centeno, right, in Paris, Friday, Jan.12, 2018. in far better shape. The eu-
zens’ expectations and to rozone economy is growing
build a more robust and re- The euro zone’s new leader says he hopes to use his term to strongly, while worries over
silient euro area.” Greece’s future in the bloc
Centeno met Thursday with bring the 19 countries that use the currency closer together and have subsided.
French President Emmanu- Portugal was among coun-
el Macron, who is leading toughen their ability to weather future crises. (AP Photo) tries that needed a bailout
efforts to bring the euro-us- during Europe’s debt crisis.
ing countries closer togeth- Centeno was credited with
er. Centeno meets later helping improve Portugal’s
Friday with French Finance economy in recent years as
Minister Bruno Le Maire. its finance minister, keeping
The eurogroup brings to- a firm hand on spending
gether the finance ministers while keeping left-leaning
of the 19 countries using the allies happy by reducing
shared currency and was some austerity measures.q