In a wide-ranging budget speech in parliament, Merkel insisted that a controversial plan to run up the largest debt mountain in the country’s history was indispensable to pull the economy, Europe’s largest, out of its slump.
“The last decade ended with an international economic and financial crisis and for Germany, a slump of minus five percent, a record in the history of our country,” Merkel said.
She added: “The new decade begins with a debate over a budget with a record debt” of almost €86 billion. “Whoever does not see that the two are directly connected…should not bother to continue to participate in this debate,” said the conservative Merkel to jeers from the opposition Social Democrats (SPD) and the Greens.
Since triumphantly winning a second term in September elections, the past few months have been less glorious for Merkel and her new coalition with the pro-business Free Democrats (FDP).
Internal squabbling by coalition members over tax policy and the country’s unpopular mission in Afghanistan have seen Merkel’s popularity plunge in the polls and her aloof leadership style slammed even by her allies. The coalition has promised tax cuts worth around €24 billion, but several senior members of Merkel’s own party have begun to get cold feet on the tax giveaway given the dire state of public coffers.
But Merkel sought to reject any resistance, saying: “We are convinced that… tax relief is necessary and will even foster growth.”
Taking aim at the centre-left Social Democrats, with whom she governed for four years in her first term, she said: “Unlike the Social Democrats, who haven’t done anything for the past ten years, we are sticking to our election programme.”
Voters appeared to approve of Merkel’s passionate speech, with a straw telephone poll taken by rolling news channel NTV showing 62 percent of people agreeing she could lead Germany out of the crisis – compared to 45 percent before she started speaking.
And her animated performance won Merkel the support of Germany’s influential mass circulation daily Bild, which said in an editorial: “Chancellor Merkel had to justify herself and the work of her… coalition. And she did it brilliantly.”
“She was up for the fight and prepared to lash out. The chancellor was in her best form,” the paper added.
But in reply head of the SPD’s parliament group and Merkel’s challenger to Merkel in September’s election said the government had “not just had a false start… but a complete political failure.”