Sept 27 (Reuters) - German voters gave conservative Chancellor Angela Merkel a second term on Sunday and allowed her to form a centre-right coalition with the pro-business Free Democrats (FDP). Here are some of the immediate challenges the new government will face:
SUSTAINING GROWTH, BUDGET CONSOLIDATION
A priority will be to ensure Europe's biggest economy, which emerged from a deep recession in the second quarter, continues to grow. Economists warn a sustained recovery is far from assured, as temporary stimulus measures expire. These include incentives for new car purchases, and a government-subsidised scheme to help firms retain workers on reduced hours. In particular, the government will need to keep unemployment from surging.
At the same time, it is under pressure to tackle a ballooning budget deficit, forecast to swell to as much as 6 percent of gross domestic product next year. This raises the prospect of a row between pro-growth advocates who want tax relief, and those who want to rein in the deficit via spending cuts and/or higher taxes.
OPEL
Germany has to ensure a preliminary deal for General Motors to sell carmaker Opel to a consortium led by supplier Magna, is completed in the next few weeks.
If the deal collapses, it would put the future of the company -- and about 25,000 German jobs -- at risk.
In particular, Berlin has to resolve a row with Britain and Belgium, which have Opel plants of their own, about who stumps up the 4.5 billion euros ($6.61 billion) in state aid needed for the deal to go through. These countries are angry at what they see as an exclusive focus from Berlin on German jobs.
An additional risk is that the European Commission could strike down the deal under its rules on state aid.
AFGHANISTAN
With violence growing in Afghanistan, Germany and other countries involved in NATO's mission there are keen to agree a plan for Afghan forces to assume responsibility for security that will lead to a withdrawal of foreign troops. Building an international consensus on this will be a priority for Germany, which has 4,200 soldiers in Afghanistan. A parliamentary mandate for sending German troops to Afghanistan must be renewed in December and this could spark a divisive debate about when to withdraw the troops.
CLIMATE CHANGE
Copenhagen's climate change conference in December will be a crucial test for world nations, and Germany will have to prepare the ground with other EU states. Merkel, widely credited with getting G8 nations to agree to fight global warming in 2007, could play a prominent role at the meeting, which aims to agree a successor treaty to the Kyoto pact on global warming.
EU'S LISBON REFORM TREATY
If Ireland rejects the EU's Lisbon reform treaty in an Oct. 2 referendum, the 27-member bloc will probably look to Germany to take a leading role in deciding what action to take. The treaty is aimed at streamlining decision-making in the EU.
IRAN
Germany is one of the six global powers involved in trying to get Iran to halt its disputed nuclear activity. Talks set for Oct. 1 in Geneva between the six nations and Iran may be crucial in deciding whether to pursue further sanctions against Tehran and the issue will be a priority for the new German foreign minister.
(Compiled by Madeline Chambers, editing by Mark Trevelyan)
(For live blog on the German election, click on: http://blogs.reuters.com/global/tag/germanelection/)
((For more stories on the campaign, double-click on )) ($1=.6810 Euro) Keywords: GERMANY ELECTION/CHALLENGES (madeline.chambers@reuters.com; +49 30 2888 5230; Reuters Messaging: ann.chambers.reuters.net@reuters.com) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
SUSTAINING GROWTH, BUDGET CONSOLIDATION
A priority will be to ensure Europe's biggest economy, which emerged from a deep recession in the second quarter, continues to grow. Economists warn a sustained recovery is far from assured, as temporary stimulus measures expire. These include incentives for new car purchases, and a government-subsidised scheme to help firms retain workers on reduced hours. In particular, the government will need to keep unemployment from surging.
At the same time, it is under pressure to tackle a ballooning budget deficit, forecast to swell to as much as 6 percent of gross domestic product next year. This raises the prospect of a row between pro-growth advocates who want tax relief, and those who want to rein in the deficit via spending cuts and/or higher taxes.
OPEL
Germany has to ensure a preliminary deal for General Motors to sell carmaker Opel to a consortium led by supplier Magna, is completed in the next few weeks.
If the deal collapses, it would put the future of the company -- and about 25,000 German jobs -- at risk.
In particular, Berlin has to resolve a row with Britain and Belgium, which have Opel plants of their own, about who stumps up the 4.5 billion euros ($6.61 billion) in state aid needed for the deal to go through. These countries are angry at what they see as an exclusive focus from Berlin on German jobs.
An additional risk is that the European Commission could strike down the deal under its rules on state aid.
AFGHANISTAN
With violence growing in Afghanistan, Germany and other countries involved in NATO's mission there are keen to agree a plan for Afghan forces to assume responsibility for security that will lead to a withdrawal of foreign troops. Building an international consensus on this will be a priority for Germany, which has 4,200 soldiers in Afghanistan. A parliamentary mandate for sending German troops to Afghanistan must be renewed in December and this could spark a divisive debate about when to withdraw the troops.
CLIMATE CHANGE
Copenhagen's climate change conference in December will be a crucial test for world nations, and Germany will have to prepare the ground with other EU states. Merkel, widely credited with getting G8 nations to agree to fight global warming in 2007, could play a prominent role at the meeting, which aims to agree a successor treaty to the Kyoto pact on global warming.
EU'S LISBON REFORM TREATY
If Ireland rejects the EU's Lisbon reform treaty in an Oct. 2 referendum, the 27-member bloc will probably look to Germany to take a leading role in deciding what action to take. The treaty is aimed at streamlining decision-making in the EU.
IRAN
Germany is one of the six global powers involved in trying to get Iran to halt its disputed nuclear activity. Talks set for Oct. 1 in Geneva between the six nations and Iran may be crucial in deciding whether to pursue further sanctions against Tehran and the issue will be a priority for the new German foreign minister.
(Compiled by Madeline Chambers, editing by Mark Trevelyan)
(For live blog on the German election, click on: http://blogs.reuters.com/global/tag/germanelection/)
((For more stories on the campaign, double-click on )) ($1=.6810 Euro) Keywords: GERMANY ELECTION/CHALLENGES (madeline.chambers@reuters.com; +49 30 2888 5230; Reuters Messaging: ann.chambers.reuters.net@reuters.com) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.