Merkel Returns From Vacation to Defend Her Lead Ahead of Vote

Photographer: Krisztian Bocsi/Bloomberg

German Chancellor Angela Merkel’s popularity has rested on her record of overseeing a steady labor market and steering Germany through the debt crisis as it closes in on its fourth year. Close

German Chancellor Angela Merkel’s popularity has rested on her record of overseeing a... Read More

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Photographer: Krisztian Bocsi/Bloomberg

German Chancellor Angela Merkel’s popularity has rested on her record of overseeing a steady labor market and steering Germany through the debt crisis as it closes in on its fourth year.

Germany’s election campaign ramps up this week as Chancellor Angela Merkel defends her lead in the polls against sharpened political attacks from opposition Social Democratic candidate Peer Steinbrueck.

Merkel will return from vacation to deliver the first of 56 scheduled campaign speeches across Germany in the Hessian city of Seligenstadt on Aug. 14. For six weeks until election day on Sept. 22, the candidates will criss-cross the country as Steinbrueck launches broadsides at the popular leader’s economic policies.

“With its delaying tactics, this government has become the favored child of the banks and has prevented them from being brought to account for their lapses,” Steinbrueck wrote in an op-ed for the Sueddeutsche Zeitung newspaper Aug. 10, accusing Merkel of holding back a financial-transaction tax.

The vote to determine whether Merkel wins a third term has ground action on the European debt crisis to a halt as the SPD strives to unseat her. Steinbrueck moved to exploit her absence this month by mobilizing a get-out-the-vote effort to win back undecided or one-time SPD voters.

While polls last week suggested the SPD candidate may be narrowing the gap, an Emnid survey published in Bild am Sonntag yesterday showed the chancellor’s Christian Democratic-led block with a 16-point lead.

Photographer: Krisztian Bocsi/Bloomberg

Social Democratic chancellor candidate Peer Steinbrueck wrote, “With its delaying tactics, this government has become the favored child of the banks and has prevented them from being brought to account for their lapses.” Close

Social Democratic chancellor candidate Peer Steinbrueck wrote, “With its delaying... Read More

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Photographer: Krisztian Bocsi/Bloomberg

Social Democratic chancellor candidate Peer Steinbrueck wrote, “With its delaying tactics, this government has become the favored child of the banks and has prevented them from being brought to account for their lapses.”

Merkel’s bloc gained a percentage point to 41 percent, while the SPD held steady with 25 percent support, the poll showed. Still, with the chancellor’s pro-business Free Democratic allies polling at 5 percent -- the threshold to enter parliament -- such a result may not be enough to reprise her current coalition and continue her policies.

Grand Coalition

The SPD-allied Green Party remained at 13 percent, Emnid showed, raising the prospect of a grand coalition between the two main parties and a shift in the government’s emphasis from austerity to growth.

Merkel has seven scheduled campaign rallies this week, extending from the industrial Rhine Valley city of Ludwigshafen to the Baltic Sea port of Luebeck. Steinbrueck plans at least 13 appearances across six states, including two with former Social Democratic Chancellor Gerhard Schroeder.

The SPD candidate has embarked on an “Open-Air Straight-Talking” campaign, which features the candidate in a town-hall-style format. At such an event on Aug. 8 in Hamburg, which drew 3,000 people, Steinbrueck accused Merkel of “lulling” voters on policy and misleading them over the cost of the crisis. He said that he’d be more direct.

‘Perception Disorder’

Merkel’s party allies have stepped forward to defend the chancellor. Michael Meister, deputy chairman of Merkel’s parliamentary caucus, struck back at Steinbrueck’s claims on the financial-transaction tax, saying Merkel’s government rallied 11 European governments to support the measure.

Steinbrueck “apparently suffers from campaign-induced perception disorder,” Meister said in a statement yesterday.

Merkel’s government joined France and nine other nations this year in proposing a levy on transactions that could begin collecting revenue as early as next year.

The opposition has said it will rely on a strategy to win back millions of former SPD voters in the final weeks of the election by pushing initiatives such as a nationwide minimum wage, more bank regulation, guaranteed equal pay for women and a crackdown on tax evasion.

GDP Growth

Merkel’s popularity has rested on her record of overseeing a steady labor market and steering Germany through the debt crisis as it closes in on its fourth year. Gross domestic product probably rose about 0.75 percent in the second quarter, more than the market consensus, according to a person familiar with a government estimate, who asked not to be identified.

The Euro crisis looms over the campaign, as governments in Italy, Spain and Portugal face turmoil and concerns re-emerge about the stability of financing for Greece, the country where it all began in October 2009.

Europe and international creditors have to come up with a new rescue package for Greece by the beginning of 2014 at the latest, Der Spiegel reported yesterday, citing documents from Germany’s central bank, the Bundesbank.

Risks tied to the current Greek program remain “extraordinarily high” and the government’s progress on reform is “hardly satisfactory,” the magazine cited the Bundesbank documents as saying. A Bundesbank spokeswoman declined to comment on the report.

A shift on Greek aid may prove difficult if the next government is led by Merkel, who has ruled out a writedown of publicly held Greek debt. Volker Kauder, the parliamentary leader of Merkel’s party, ruled out such a step.

“I wouldn’t consider it at all,” Kauder told Bild newspaper when asked about a so-called haircut after the vote. “A government led by the CDU will say no to that in Europe.”

To contact the reporter on this story: Patrick Donahue in London at pdonahue1@bloomberg.net

To contact the editor responsible for this story: James Hertling at jhertling@bloomberg.net

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