Political Cred

Fooling None of the People

Economics Minister Sigmar Gabriel Source DAVIDS Gregor Fischer
German business leaders are skeptical that Mr. Gabriel will prevail over the SPD's strong left wing on key pro-business issues such as wages, taxes and trade barriers.
  • Why it matters

    Why it matters

    The results of the Handelsblatt Business Monitor of leading German business people suggests that the Social Democrat party under its likely 2017 chancellor candidate, Sigmar Gabriel, will have a difficult time unseating Angela Merkel.

  • Facts

    Facts

    • Of 667 German business leaders surveyed in Handelsblatt’s Business Monitor, 57 percent were dissatisfied with the work of Mr. Gabriel.
    • Business leaders expect leftists to gain the upper hand in the SPD, thwarting business-friendly policies.
    • Mr. Gabriel received 41% approval in the survey;  Chancellor Merkel, 70%.
  • Audio

    Audio

  • Pdf

In the beginning was the promise: “The SPD is very close to Ludwig Erhard,” the political father of the country’s post-war economic boom in the 1950s and 60s.

After his party’s humiliating 25-percent finish in 2013 elections, Sigmar Gabriel, chairman of Germany’s Social Democratic Party, assured business leaders and anyone who would listen that the SPD was devoted to the “working middle class.” The party is junior partner in Chancellor Angela Merkel’s Christian Democrat-led right-left coalition.

“Those who work hard will see results,” Mr. Gabriel, who is Germany’s vice chancellor and economics minister, said recently in a message intended for Germany’s political center.

The majority of Germany’s business elite don’t feel confident Mr. Gabriel will be able to sustain this moderate course in the long run against the will of the powerful left wing of his own political party.

But more than a year since the SPD’s election defeat, German business leaders are overwhelmingly distrustful that Mr. Gabriel, the SPD’s likely chancellor candidate in 2017, will deliver on the promise of a moderate, pro-business agenda, according to Business Monitor, a survey of 667 business leaders conducted for Handelsblatt by Forsa, a polling institute. Some 57 percent of those surveyed said they were dissatisfied with the work of the vice-chancellor and economics minister. This vote of no confidence stems primarily from Mr. Gabriel’s apparent lack of credibility with the business community. An overwhelming majority of business leaders surveyed, 71 percent, expect him to distance himself from the business-friendly policies he promised a year ago.

The economics minister has spoken out against tax increases, is fighting within his own party to bolster support for the Transatlantic Trade and Investment Partnership (TTIP) between Europe and the United States, and is approving arms deals.

But the majority of Germany’s business elite don’t feel confident Mr. Gabriel will be able to sustain this moderate course in the long run against the will of the powerful left wing of his own political party.

 

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Because support for Social Democrats among German voters remains stuck at about 25 percent in polls, German business leaders expect leftists in the SPD, such as deputy party leader Ralf Stegner and Germany’s labor minister, Andrea Nahles, to gain influence over the next three years of the current legislative period.

A clear majority of 64 percent of business leaders no longer expect the right-left “grand coalition’’ of SPD and Chancellor Merkel’s Christian Democratic party to support business interests in the run up to Germany’s next federal election in 2017.

Only 26 percent of respondents believe Mr. Gabriel will be able to convince his own party to support the the proposed transatlantic trade agreement with the United States, which German leftists accuse of undermining European health and data standards. SPD opposition to the pact could force Chancellor Merkel’s government to delay or withdraw its support for the trade agreement, which could stop the massive project at the European level.

 

Jean-Claude Juncker, November 2014 Source DPAjpg
German business leaders are skeptical that a €315 billion spending program championed by European Commission president Jean-Claude Juncker will stoke economic growth. Source: DPA

 

Some 51 percent of top German business executives feel Germany is already moving in the wrong direction politically. They are especially opposed to the increased spending demanded by new pension and social welfare benefits pushed through by the SPD, such as lowering the retirement age to 63 and strengthening temporary contracts and contracts for services. Mistrust of the SPD chairman is having a concrete, negative impact on Germany’s labor market.

For instance, only 38 percent of companies in the survey said they planned to create new jobs next year, while 60 percent either do not intend to create new jobs at all or are planning cutbacks.

Another unfavorable result of the Handelsblatt Business Monitor for Mr. Gabriel is that while only 41 percent of senior managers approve of his work, a full 70 percent are satisfied with the work of Chancellor Merkel.

If the 2017 national election hinged on the votes of the managers in the survey, Mr. Gabriel could forget about challenging Mrs. Merkel for the chancellorship.

 

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The business leaders were surprisingly pessimistic about the chances for passage of the proposed Transatlantic Trade and Investment Partnership.

Only 26 percent said they expected to benefit from the agreement, if it did eventually get adopted. And more than two thirds, 69 percent, said TTIP, even if it did pass, would have “no impact” on their businesses. Apparently the German business community has little faith in the European Commission’s promise that the treaty will lead to “hundreds of thousands of new jobs.” Managers were also unconvinced by a statement from Mr. Gabriel’s economics ministry that TTIP would reduce costs for German businesses in transatlantic trade and ease access into the U.S. market, especially for small and mid-sized companies.

According to federal government estimates, the German economy grew by 1.2 percent his year and it is to grow another 1.3 percent in 2015. But representatives of the German economy are not as optimistic as government prognosticators. Some 58 percent of business leaders surveyed believe economic output will not rise next year, or at least not as much it did as this year. Only 5 percent of managers in the survey agree with the federal government’s optimistic scenario of stronger growth for next year.

 

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The majority of the business leaders polled were also skeptical of European Commission President Jean-Claude Juncker’s planned €315 billion ($385 billion) economic stimulus program. Only 40 percent expect the program to revive the economy, while 55 percent believe that Mr. Juncker’s offensive will “fizzle out without achieving much.”

The majority of business leaders polled were also skeptical of European Commission President Jean-Claude Juncker's planned €315 billion ($385 billion) economic stimulus program.

Another result of the Business Monitor poll is nothing short of disastrous for Mr. Juncker’s goal of stimulating private corporate investment activity with the massive program. An overwhelming 94 percent of business leaders polled say Mr. Juncker’s initiative will not affect their 2015 investment decisions.

The Handelsblatt poll also suggests that Germany’s Free Democratic Party, a pro-business member of right-leaning coalitions led by Christian Democrats and Social Democrats, will not return to influence in Germany in the near future, if at all.

The party was dealt an existential blow last year in a disastrous election showing, when it failed to reach the 5-percent voter hurdle to gain representation in the German parliament. The FDP, led by its chairman, Christian Lindner, is currently polling about about 2 percent.

 

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Some 70 percent of the country’s business elites assume the FDP will never again surpass the 5-percent threshold needed to enter parliament. The reason, say many respondents, is that the party is already largely redundant today.

The economic decision-makers in the poll also don’t expect the right-wing party Alternative for Germany (AfD), a splinter group that made gains in recent German state elections, to replace the FDP as the country’s economically liberal counterbalance. Instead, 88 percent of respondents ascribe “completely different goals” to the AfD, noting that it is more likely the new political group will appeal to the right-wing spectrum of the German electorate, where it will kindle resentment against the euro, foreigners and other minorities.

 

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The survey is a sober message for Mr. Lindner, the FDP chairman, who hopes to revive his party as a pro-business political force , starting with a new party logo to be unveiled in Stuttgart in January.

Magenta, the corporate color of Deutsche Telekom, the former monopoly phone company, will be added to the FDP’s traditional yellow-and-blue logo. Mr. Lindner wants to give his party a new coat of paint, combined with a new pitch and focus. This, the 35-year-old thinks, is the only way organized liberalism can win the battle against irrelevance after its disastrous showing in the 2013 national election.

The Handelsblatt poll suggests that Mr. Lindner has his work cut out for him.

 

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Thomas Sigmund is the Berlin bureau chief of Handelsblatt. Michael Brackmann and Benjamin Wagener are Handelsblatt editors in Düsseldorf. To reach the authors: sigmund@handelsblatt.com, brackmann@handelsblatt.com and wagener@handelsblatt.com

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