Editorial Board

Europe Can't Afford a Leaderless Germany

Maybe Germany can get by without a government, but the euro zone needs a leader in Berlin.

Nobody said leading was easy.

Photographer: Krisztian Bocsi/Bloomberg via Getty Images

More than three months after its federal election, Germany still has no new government. Oddly enough, this may be less of a problem for Germany, which continues to enjoy a strong economic run, than it is for the European Union. The euro zone needs reform, and that won't happen without German leadership.

Merkel, German SPD Said to Reach Preliminary Deal in Talks

Angela Merkel promised in a speech on New Year's Eve to form a government promptly. That's easier said than done. Talks between Merkel's Christian Democrats, the Greens and the Free Democratic Party collapsed in mid-November. Merkel has since negotiated with the Social Democrats, but neither party is eager to revive their earlier alliance, and they remain distant on a range of topics including immigration and taxes.

New talks with the Social Democrats are expected to start this weekend. It's to be hoped they succeed, and that the two sides recognize the need to make mainstream centrism -- now under threat in Germany, as elsewhere -- successful and popular. But there's a fair chance that Merkel will be forced to lead a minority administration or call new elections. Meanwhile, her support is flagging. A recent poll found that 46 percent of respondents want her to quit immediately.

In one way, the lack of urgency is understandable: The paralysis in Berlin isn't yet hurting the German economy. Growth is strong, and unemployment has fallen to its lowest since the early 1990s. The rest of the euro zone, not before time, is also enjoying a strong recovery, spreading lately even to laggards such as Portugal and Italy. However, the single-currency system is still deeply flawed, and another financial crisis would expose its weakness. In particular, it lacks a fiscal system that can funnel resources from countries that are doing well to others in recession.

The problem is widely acknowledged, and the European Commission has put forward a plan to address it. The proposals include a new financial mechanism for cushioning shocks. In a speech last year, France's President Emmanuel Macron also laid out plans for greater fiscal integration. None of these ideas will be seriously discussed -- much less put into effect -- until Germany has a fully functioning government.

For its own sake, but even more because Europe's wider problems need to be confronted, Germany must delay no longer and get itself a new government.

    --Editors: Ferdinando Giugliano, Clive Crook

    To contact the senior editor responsible for Bloomberg View’s editorials: David Shipley at davidshipley@bloomberg.net .

    Before it's here, it's on the Bloomberg Terminal.
    LEARN MORE
    Comments