Germany risking export fuelled growth

The German Chancellor, Angela Merkel, is struggling in her pursuit over the pro-business agenda, as a result of the difficulty with Social Democratic Party coalition partners, as they are blocking proposals to simplify the tax system and relax labour laws.

Furthermore, the Chancellor is now under pressure from the Christian Democratic Union as they are opposed to policies that are focusing on business, as well as an increase in pension-payments.

Amongst the turmoil around her, senior members of her party have taken to criticizing world financial markets amid fears of the nature of export growth and the general health of the German economy.

The labour market is currently very sensitive in the euro zones as Nokia Oyj, Continental AG and other leading manufacturers are relocating jobs to Eastern Europe, due to the availability of cheaper labour.

Merkel had promised ‘business-friendly’ starting with paying for a payroll tax cut with a sales-tax increase, although since 2005 she has had to dump such policies, as well as simplifying the tax system and loosen labour-market laws.

Any further downturn in the country’s economy would have devastating affects throughout the euro zone as Germany accounts for nearly 33 percent of the 15 countries GDP.

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