Humbled Merkel pledges change of course after coalition clashes

By BLOOMBERG

FRANKFURT • German Chancellor Angela Merkel pledged to stabilise her six month-old government after a summer of clashes among party leaders that twice pushed her coalition to the brink of collapse.

In a moment of humility, Merkel expressed regret about the latest infighting and suggested it was alienating voters after support for Merkel’s Christian Democratic Union (CDU)-led bloc declined to a 21-year low in a poll last week.

“In recent months we’ve focused in many instances too much on ourselves,” Merkel told reporters in Berlin yesterday. “That has to change.”

A day after her coalition eked out a truce in a clash over Germany’s domestic intelligence chief, Merkel said leaders of her CDU, Bavaria’s ruling Christian Social Union (CSU) and her Social Democratic coalition partner will meet on Oct 1 to plot strategy for the rest of the year.

“We’re living in extraordinarily challenging times,” Merkel said, citing the UK’s exit from the European Union, Germany’s diesel-car crisis and social programmes such as nursing care. Party leaders will conclude discussions on a diesel solution at the Oct 1 meeting, she said.

After almost 13 years in office that make her Europe’s longest-serving leader, Merkel in her fourth term has found herself hemmed in for weeks.

The latest conflict was stoked by next month’s election in Bavaria, a state the CSU has governed virtually on its own since World War II. Polls suggest the party will lose its legislative majority in the Oct 14 ballot and support for the anti-immigration Alternative for Germany will surge.

Meanwhile, German business confidence slipped amid an intensifying trade war between the US and China and emerging-market turmoil.

The closely-watched Ifo institute’s index of business confidence fell to 103.7 in September.

The median forecast in a Bloomberg survey was for a drop to 103.2 from a revised 103.9. Measure for current conditions and expectations slid.

Germany’s dependence on exports and its significant trade surplus leave the country particularly exposed to global trade frictions. Yet, the Bundesbank has said the German economy can cope with any repercussions thanks to strong domestic demand and a buoyant labour market. It predicts growth will rebound markedly and has blamed recent weakness in factory orders and production on temporary problems of automakers with new emissions-test procedures.

Manufacturing confidence declined in September, according to Ifo, while sentiment in services was broadly unchanged.