Merkel’s Not for Turning as She Lays Out Fall Election Plan

German Chancellor Angela Merkel signaled she’ll push Europe to balance economic growth and budget restraint for another four years as she laid out her campaign themes for winning a third term in September.

Merkel assured delegates at a conference of Germany’s BDI industry association that her party won’t raise taxes after the federal election and said she would seek to lower levies paid to fund renewable energy as a result of her decision to phase out nuclear power in Europe’s biggest economy. Her policy of austerity during the euro area’s sovereign-debt crisis isn’t about pain, she said, but about economic overhauls and deficit reduction that open the way for more government investment.

“In the long run, Germany will only do well if the entire European economic region, particularly the euro area, gets back on its feet,” Merkel said in her speech in Berlin today. Germany anchored Europe during the crisis by combining growth and debt reduction, and “this is the policy we have to continue,” she said.

Less than three months before the Sept. 22 vote, Merkel’s speech was the clearest outline yet of her re-election strategy. It sets up a clear divide between the tax-raising plans espoused by the opposition Social Democrats led by Peer Steinbrueck, her first-term finance minister, and their Green party allies.

Additional Spending

Merkel said “50 to 60 billion euros” ($66 billion-$80 billion) in tax revenues over the next four to five years, combined with deficit reduction during her second term, open the way for additional social-welfare spending and investment in Germany without threatening her budget targets.

“Due to the fragile situation, we have a responsibility to strengthen domestic demand” in Germany, she said.

While lauding German industry’s contribution to Europe’s biggest economy and the “excellent” job situation, Merkel gave little ground on what have been her second-term priorities. Her drive to get more women in the workplace will continue and specific industry branches must be open to paying minimum wages, she said, citing seasonal tourism workers on the island of Ruegen in her electoral district.

Pressing ahead with the energy strategy is “the first order of the day after the election,” including legal changes to cap the rise in subsidies for renewable energy that is driving up electricity bills in Germany, Merkel said.

German power consumers paid 17 billion euros in subsidies last year, BDI president Ulrich Grillo said in a speech following Merkel’s.

“The burden has reached the limit for many companies,” he said. “You’re pulling the plug on German industry. The costs of the energy-shift project are getting out of hand.”

Merkel reiterated her desire to extend her current coalition, saying the “differences are smallest” between her Christian Democratic bloc and its Free Democratic partner.

“We will continue working for Germany to stay good” because the rest of the world “isn’t asleep,” she said.

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