Governing Germany

Loosen Up the Coalition Contract

Source: DPA
Volker Kauder is easing up on businesses.
  • Why it matters

    Why it matters

    Businesses have criticized the agreement between Germany’s ruling coalition parties, saying it should be flexible so it can adapt to changing business climates.

  • Facts


    • The German coalition contract should be treated as a guideline, not like constitutional law.
    • Germany’s unions are trying to get the coalition contract changed to their advantage.
    • The governing parties need to take into account changes regarding international trade, exports and the Ukraine crisis.
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Volker Kauder, the leader of the ruling Christian Democrats’ faction in the lower house of the German parliament, had given the business community his word. There will be no new financial burdens placed on them beyond the points agreed in the contract between the country’s ruling coalition parties, Chancellor Angela Merkel’s Christian Democrats and the Social Democrats.

But his statement also meant that everything in the 130-page document would be implemented. This is despite the several changes in political climate since the contract was signed, including tensions in Ukraine and Russia, stagnation in France’s economy ― Germany’s most important trading partner ― and the faltering attitude toward Europe’s austerity plan.

Domestic realities in Germany have also changed. Incoming orders to Germany have fallen three times in a row, companies are pulling back on investment and it looks like there will be fewer jobs available in the economy from spring next year.

As a result, Mr. Kauder said he wants to focus on generating growth instead of redistributing and regulating.

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