Page 8 - ISQ UK_October 2017

INVESTMENT STRATEGY QUARTERLY

Setting a Legacy(cont.):

Mrs Merkel and the Future of Europe

Name of Federal Republic of Germany Chancellor Date served
Helmut Kohl 1982 - 1998
Konrad Adenauer 1949 - 1963
Angela Merkel 2005 - present
Helmut Schmidt 1974 - 1982
Gerhard Schroder 1998 - 2005
Source: Wikipedia

Of course we have seen all of this before. Compared to America, or dynamic and more integrated Eurozone she would like. And the
even the UK or Switzerland, the German critique of ultra-low best route is by encouraging other countries to look a little bit
interest rates, quantitative easing, banking sector bailouts or even more like Germany, whilst agreeing with that most un-German
decisive economic support for the ‘Club Med’ nations over the last policy of loosening the spending purse strings to help ease the
seven or eight years, has hurt the overall performance and political transition process.
stability of the Eurozone. What is noteworthy however - in a policy
I call ‘German pragmatism’ - is that all of the above measures and ‘Aid for reforms 2’ has to be a stronger sequel than the original at
policies eventually got enacted with the tacit support of the both levels, and much more than Angela Merkel’s legacy depends
German leadership. At heart a Merkel-led Germany remains on it.
inherently pro-Europe and additionally in favour of a stronger,
more cohesive and ideally more dynamic Eurozone. The price
though, has always been to largely undertake economic policy
measures the German way. Whilst the concept of ‘aid for reforms’
has a lot of logic and fiscal prudence attached to it, unfortunately
it has failed to fire up the Eurozone electorate whose multi- KEY TAKEAWAYS:
generational belief in a closer European ideal has been severely • There is much work for Mrs Merkel to do and the
tested over recent years. next five years is likely to be the crucial epoch to
achieve this
Fortunately, some of the more apocalyptic political choice thoughts
for 2017 have failed to occur, with populists failing to take control • Merkel and Macron have an opportunity to drive
after elections in countries like France and Holland, whilst internal forward the debate on the future of the region at
strife in other materially sized Eurozone countries such as Italy has multiple levels
also not bubbled fully to life. Incumbent mainstream politicians
have one more electoral cycle to re-inspire the Eurozone electorate. • ‘Aid for reforms 2’ has to be a stronger sequel
Angela Merkel will need to continue to exercise not just pragmatism than the original
but also a greater feeling of momentum to achieve the more

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