Why Germany’s new government is not about to go soft on the euro

FOR nearly half a year serious business in the European Union has been on hold as Germany struggled to cobble together a government. On March 4th the waiting came to an end when the centre-left Social Democratic Party declared that its members had voted two-to-one to rejoin Angela Merkel’s conservative Christian Democrats (CDU) in coalition. The sighs of relief in Paris and Brussels were almost audible. Yet inside the Willy Brandt Haus, the SPD’s Berlin headquarters, the mood was distinctly flat. So divisive had the issue been that party apparatchiks agreed in advance to mute their reactions to the result. The SPD has secured juicy ministries and all sorts of policy concessions from Mrs Merkel. But announcing the news on Sunday, Olaf Scholz, the SPD’s acting chairman and the presumed next finance minister, displayed all the enthusiasm of a funeral celebrant on Xanax.

That reflected the deep ambivalence of a wounded party towards renewing an arrangement that since 2013 has squashed its identity (and its vote share). It might also serve as a warning for foreigners who expect the SPD to inject a dash of vigour into Germany’s European policy. EU officials speak of a window of opportunity for reforms opened by Emmanuel Macron’s election in France, a sprightly economic upswing and the unfamiliar absence of crisis. Their hopes were further elevated by a SPD-CDU coalition agreement apparently infused with Europhilia, its first chapter titled “A new departure for the EU”. The red lines outsiders had come to expect from Germany on matters like risk-sharing in the euro zone seemed conspicuously absent.