Merkel fully immersed in the grand coalition

Germany's grand coalition may be dead, but its spirit lives on in its successor.

The liberal Free Democrats' record score in last month's polls may have fuelled hopes of more ambitious tax and spending cuts and economic reforms. But even before the new government has taken office, those ambitions are being revised downwards due to Chancellor Angela Merkel's (pictured) excessive caution.

Having campaigned for a coalition with the pro-business FDP instead of the centre-left Social Democrats to revive economic growth, Merkel is slamming on the brakes in coalition negotiations for fear of losing a key election in Germany's most populous state next year.

The centre-right alliance is starting to look, as Clausewitz might have said, like the continuation of the grand coalition by other means.

Enacting legislation

That's the way it goes in Germany. There's always another election coming along that discourages bold reforms. True, if the centre-right loses in North-Rhine Westphalia, once a Social Democratic bastion, it would also forfeit its newly acquired majority in the upper house of the parliament, which gives the government a freer hand to enact legislation.

But what's the point of having a Bundesrat majority if you don't use it to push through reforms?

Crumbling tax revenues, higher welfare costs due to rising unemployment and a budget balancing constitutional amendment adopted during the financial crisis have shrunk the scope for tax relief for business and lower and middle-income groups.

Merkel's conservatives promised a modest 15 billion euros (Dh81.53 billion) in tax cuts in the next four years, while the liberals pledged 35 billion euros. Although the talks won't be concluded until next week, it is already clear the outcome will be at the lower end of the scale, and in small instalments rather than a big bang.

Anxious to avoid alienating the trade unions, Merkel has squelched proposals from a coalition working party to reduce job protection and the rights of works councils in small businesses, and worker representation in German boardrooms.

The chancellor has been a cautious consensus-builder ever since she nearly lost the 2005 general election with a more radical pro-market platform. But supporters had hoped the "real Angela" would emerge if she got her desired coalition with the FDP.

Will she be bolder after the North-Rhine Westphalia poll next May? Don't hold your breath. Whisper it softly, but this may be the real thing.

You can take the woman out of the grand coalition, but you can't take the grand coalition out of the woman.