MercoPress. South Atlantic News Agency

Germany's Merkel Set To Form New Coalition Govt

Angela Merkel reacts after the German general elections in Berlin

German Chancellor Angela Merkel Monday prepares to form a new center-right government, after she won a second term in Sunday's general election.

We have reached our election goal,“ said Merkel, who is about to start coalition talks with the business-friendly Free Democratic Party.

Together with the FDP, the CDU/CSU got 48.4% of the votes, enough to secure a new coalition government, preliminary official results showed Monday.

”The results ensure a stable majority,“ Merkel said.

FDP leader Guido Westerwelle said they are ”ready to take up responsibility and help govern Germany.“

Coalition talks will start next week at the latest, with key jobs at the economics and finance ministries up for grabs.

Westerwelle is expected to become vice chancellor and foreign minister. Karl-Theodor zu Guttenberg of the CSU is tipped to stay in his post as economics minister or may become finance minister.

FDP financial expert Hermann Otto Solms is a key contender for the finance ministry and his party colleague Rainer Bruederle for the economics ministry.

Merkel's challenger, Frank-Walter Steinmeier, and his Social Democratic Party won only 23.0% of votes - the worst result for the SPD since 1953.

Steinmeier will become SPD parliamentary floor leader.

Voter turnout was at a record low, with only 70.8% of the 62.2 million Germans who are entitled to vote casting their ballot.

Preliminary official results show that a center-right government will have a comfortable majority of 332 seats in a 622-seat lower house of parliament after the FDP won its highest score ever in a national election.

The Left Party got 11.9%, while the Greens won 10.7% of the votes.

The new center-right coalition has its work cut out, as Germany struggles to emerge form the sharpest recession in over 60 years.

”A government coalition including the FDP should be welcomed from the viewpoint of Germany's corporate world,“ said Thorsten Polleit of Barclays Capital.

Merkel and Westerwelle said tax cuts are on the agenda, although the size and timing remains unclear. They may also extend the lifespan of nuclear power plants.

”We will do all in our power to have growth push up tax revenues,“ Merkel said. ”With an economic slump of 5%, it won't be possible to cut debt. We need to return to a situation prior to the crisis, so that tax revenues will flow. A [tax] relief can contribute to that.“

Peter Loesche, professor for political science at the university in Goettingen, said that coalition faces a difficult task.

”There will be symbolic tax cuts initially. The main topic will be the deficit and rising unemployment next year, which will dampen the coalition's popularity,“ said Loesche. ”There won't be any big reforms. There will be a big spending cut program and tax hikes in 2011.”