Black 038; yellow

Angela Merkels new government takes Germany rightwards....

In Germanys colour-reflective politics,this is a huge black-yellow triumph. In Sundays national elections,Chancellor

Angela Merkel was assured of a return to her countrys leadership,but with a ruling coalition that has shifted decidedly rightwards. The results in the end came as a surprise to even those who had anticipated a rough ride for the two big parties Merkels Christian Democrats CDU and her coalition partner till last week,the Social Democrats SPD. The SPD netted 23 per cent of the vote,registering its worst post-war performance. The CDU,with a third of the vote,fell well short of its expectations,but with the support of the pro-business Free Democratic Party FDP,it can form a ruling coalition with a comfortable majority. And with Germanys,and the rest of the worlds,worst year economically being the context and prime issue in the election campaign,the result affirms the popular perception that free-market capitalism has to be fixed,not jettisoned.

In that,the election result consolidates the rightward shift in European politics. But it also defines the issues of economic well-being more starkly than perhaps anywhere else in Europe. Merkel,who lacks the charisma and flair for grand gestures that have defined so many of her predecessors as chancellor and also leaders like Frances Nicolas Sarkozy,is a sharp-nosed pragmatist. Over the past years,she worked through the contradictions of the grand coalition with the Social Democrats. Now,she may actually temper some of the Free Democrats stridently liberal economic and political demands. For instance,on the FDPs campaign for tax cuts. But those will probably be differences of the degree and pace of reform,not disagreements. Differences over Germanys anti-terror regime may be more sticky.

In the year since the collapse of Lehman Brothers,governments worldwide have been forced to play a more interventionist role in the financial sector. Now,as the fears of another great depression begin to recede,the work of the big economies to coordinate and address the problems outlined is no less challenging as last weeks G-20 meet showed. With the left and right of Germanys vocal polity separating once again,how they reorient themselves to the task of talking through these issues will be fascinating to track.