German Chancellor Angela Merkel is in the process of forming a new, centre-right coalition with the Free Democratic Party, after German voters returned her to office for a second term.
Merkel is to hold a meeting with leaders of her Christian Democratic Union/Christian Social Union (CDU/CSU), to prepare for upcoming coalition talks with the pro-business Free Democrats, whose leader Guido Westerwelle is widely expected to be appointed Deputy Chancellor and Minister for Foreign Affairs.
Merkel's CDU and its sister party the Bavarian CSU, won 33.8 per cent of the vote and the Free Democrats took 14.6 per cent – enough to ensure a majority of seats in parliament. The Social Democratic Party (SPD), Merkel's former partner in the uneasy 'grand coalition' of the last parliament, fared terribly, taking just 23 per cent of the vote, down 13 per cent from 2005. The SPD leaked votes to The Left Party, which won 11.9 per cent of the vote, and the Greens with 10.7 per cent.
The result gave the CDU/CSU 239 seats and the Free Democrats 93 in the lower house — for a comfortable center-right majority of 332 seats to 290. The Social Democrats won 146, the Left Party 76 and the Greens 68.
Merkel, 55, had said she would hold 'swift and decisive' coalition talks with Westerwelle. The new centre-right government is expected to lower taxes in an effort to spur growth and create jobs. Tax relief for families is also on the agenda.
Germany's economy — Europe's largest — has been badly hit by the downturn. Though it returned to modest growth in the second quarter and business confidence is rising, GDP is still expected to shrink by 5 per cent or more this year — the worst performance since 1945.
That is expected to create hurdles for the next government because a rising budget deficit bloated by stimulus spending during the crisis will make it harder to deliver the promised tax cuts.
Among the thorniest issues that face the new government is its participation in the NATO-led mission in Afghanistan. In the weeks ahead of the election, extremists from al-Qaida and the Taliban both issued messages aimed at Germany, including threats of retaliation if they did not withdraw their 4,200 troops.
Portugal's governing Socialist Party has been re-elected, but has lost its overall majority.
Prime Minister José Sócrates won 36 per cent of the vote, seven points ahead of the centre-right Social Democrats.
The election campaign was dominated by disagreements over how to deal with Portugal's economic crisis.
Mr Sócrates promised large-scale public works while the Social Democrats advocated moves to boost private investment.
Sócrates will face hard choices about whether to try to form a coalition or rule with a minority government.
28 September 2009