2010-06-15

German government to fall

Angela Merkel's government threatened with collapse
Criticised at home and abroad for mishandling the euro crisis, Merkel's latest political headache is the four-year €80bn (£67bn) austerity package passed last week in an attempt to reduce Germany's deficit. Many of Merkel's own CDU MPs fear a voter backlash after growing criticism that the cuts are socially imbalanced. Almost 80% believe the cuts to be socially unfair, while 67% want an increase in the top rate of tax, which Merkel has strongly resisted. Public anger at the package spilled over at the weekend when thousands of demonstrators took to the streets.

The package has also stoked the anger of Merkel's French counterpart, Nicolas Sarkozy, who has accused the Germans of creating an atmosphere that will stifle growth in Europe at a time when it should be stimulated. Sarkozy arrived in Berlin for talks with Merkel tonight – a meeting which the German leader cancelled at the last minute a week ago, adding to speculation that relations between the two politicians are at an all-time low.
Enjoy the euro rally while it lasts.

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