News update as of January 12, 2018

Germany/Hopes of a new government. Following five days of intense negotiations, three German party leaders – Angela Merkel and Horst Seehofer of the CDU and CSU respectively, two conservative parties, and Martin Schulz of the social democrat SPD – presented an agreement in principle of what could resemble the programme of a new 'grand coalition' involving those parties. The 28-page document, which goes into a good level of detail, indicates that the government would invest around 45 billion euros in areas such as education, infrastructure (transport, energy, internet) and public services (hiring 15,000 police officers and 8,000 care workers). Given the low rate of unemployment in Germany, the government would lower unemployment contributions by 0.3%. Equal contributions, from employers and employees, for health insurance would be restored. In addition to a 14.6% contribution, which would be equally shared, health insurance funds would have the right to take an additional payment from insured individuals, of between 0.5% and 1.5%. Furthermore, the country's law on temporary work (Arbeitnehmerüberlassungsgesetz) will be reviewed in 2019, under the proposed programme, in order to achieve adaptations to the digital economy. Laws on co-determination will also be reviewed, so as to allow for experimentation with "opening clauses" for companies that respect sector-level collective agreements. This is also geared towards better harnessing the opportunities offered by digitalisation, and to create flexibility in the co-determination system and render it more modern and entrenched. A bill that was ultimately blocked by the conservatives in the previous legislature, and which would allow people to switch more easily between part-time and full-time work, will also be evaluated. Although the text goes into great detail, it should be underlined that, for the time being, it merely indicates the intentions of the potential coalition. The parties still need to decide whether to initiate official negotiations to form a government (Koalitionsverhandlung). After the agreement was presented, officials from the conservative side made it clear their party bodies would most likely give the green light to forming a government with the SPD. However, the SPD's leadership underlined that the opening of official talks would be subject to its members reaching an agreement at a congress planned for 21 January. If a deal to establish a coalition is ultimately agreed, the SPD has said that its involvement in the government will need to be backed by a referendum, in which its 430,000 activists will vote. In the best-case scenario, Germany will not have a government until March. At worst, new elections will be expected in September 2018.