Labour must hope that Cameron and Osborne do not have Merkel’s political nous

by Callum Anderson

On Thursday, George Osborne will give his penultimate Autumn Statement before the 2015 general election. It is likely to be a highly political Autumn Statement. But whilst most of its content has yet to be leaked (at least at the time of writing), save for the likely rolling back of green levies – an attempt by the coalition to tackle the “cost of living” crisis – there is still scope for the prime minister and the chancellor to create huge problems for Ed Miliband and Ed Balls, if they can demonstrate that they are beginning to understand the economic concerns of voters, and shift to the centre ground.

Hopi Sen has already entertainingly set out how Osborne and the Conservatives could steal a march on the two Eds on the ‘cost of living crisis’. Increasing the minimum wage above inflation each year for the next five years, subject to the advice of the Low Pay Commission; raising the tax free personal allowance by £500 each year, and thus lifting millions of people from the burden of tax; reintroducing the 10p tax rate temporarily, benefitting all full-time workers on the minimum wage; and announcing an immediate cut in domestic energy bills, funded by a tax on overseas buyers of expensive property, are just a few measures that would leave the Labour hierarchy scratching their heads as to how to respond.

Indeed, such a strategy has been expertly executed by Angela Merkel, the German Chancellor, since she was elected in 2005. Her Christian Union party (CDU) – Germany’s conservative party – has been the lead partner in the previous two coalition governments: first with the Social Democrats (SPD) between 2005 and 2009, and second with the Liberals (FPD) between 2009 and 2013, and is set to enter another Coalition with the SPD within the next month.

Ms Merkel has been particularly adept in not only keeping the CDU resolutely on the centre ground of German politics, but also shifting the balance of responsibility disproportionately to her junior coalition partners. For instance, during her first term, Ms Merkel astutely took advantage of the unwillingness of SPD members to enter a coalition government with her own CDU to, in the first instance, solidify the “Hartz” labour market and welfare reforms of her SPD predecessor, Gerhard Schroeder, as well as ensure that both parties shouldered the responsibility for the substantial austerity measures taken in response to the 2007-08 financial crisis.

Likewise in her second term, Ms Merkel has been, perhaps too successful, in allowing the FDP to shoulder much of the blame in the slow response to the Euro crisis of the last few years. I say too successful because the FDP, who have traditionally had more in common with the CDU than any other party in the German parliament, crashed at the federal elections in September to such an extent that they have no seats for the first time since 1945.

At the same time, it was also Merkel’s CDU party that, as a governing party, began to make the case for a statutory minimum wage in Germany, a policy that is set to be implemented by the CDU-SPD coalition government from 2015. By advocating such policies, Merkel and the CDU were able to present themselves as on the side of ordinary working Germans, which left the SPD and their ‘Chancellor candidate’ Peer Steinbrueck in no-mans land at the last federal election.

So, Ms Merkel has been relatively successful in holding the CDU to the centre ground, by adopting positions that have traditionally been held by centre-left parties, without completely leaving her own members and supporters disillusioned. Clearly, there is a good argument that the Cameron and Osborne do not have quite the same luxury as they have a right wing, which is agitating for a more authentic form of small-c conservative government (naturally forgetting that they are in a coalition).

There is also, of course, the personality factor. Many Germans like her cautious, sensible and pragmatic style, and so expect the Conservatives to continue to attempt to turn the 2015 General Election into a presidential-style election. If the Conservatives are able to do this to some degree, in addition to presenting themselves as moderates to the electorate, then the two Eds will need to provide a credible alternative, which would entail being clearer then they are currently.

Labour is, to a certain extent, lucky. Merkel has undoubtedly profited from not having a rogue right wing in her own party, and although the ‘Alternative for Germany’ party could prove to give her problems during her third term in office, they have not yet reached the status that UKIP and Nigel Farage have achieved here in Britain. The German political culture, with coalition governments the norm, also differs from here. Then there are of course factors such as the electoral system that benefits Labour disproportionately, which, with the more proportionate system, Germany does not experience.

However, if Osborne announces a number of the policies mentioned earlier, then Labour could have a significant problem: how do the two Eds react if the chancellor signals a significant shift to the centre ground on Thursday? Let’s hope they have an answer.

Callum Anderson is a recent Economics and German graduate from the University of Birmingham

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One Response to “Labour must hope that Cameron and Osborne do not have Merkel’s political nous”

  1. swatantra says:

    Excellent aritcle! Frau Merkel could teach Ed n Ed a thing or two, about the value of coalition, the political norm in Germany, cautious sensible and pragmatic, and do nothing to scare the horses. As for Dave and George, they’re not going to take any lessons from Germany, because they think they know it all.

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