Merkel to discuss budget With Schroeder in Coalition Talks

German Chancellor-designate Angela Merkel and her Social Democrat partners today will seek to narrow a rift over how to reduce the budget deficit as the two sides prepare to form the first so-called grand coalition since 1969. The talks between Merkel and outgoing Chancellor Gerhard Schroeder's party will start at 5 p.m. in Berlin. They'll be led by Merkel and Social Democrat Chairman Franz Muentefering, who will be vice-chancellor and labor minister. Germany's bidget deficit has exceeded European Union limits since 2002. ``Both sides are faced with enormous pressure to make this coalition work,'' said Gerd Langguth, a professor of political science at Bonn University and a biographer of Merkel, in an interview Oct. 13. ``That involves concessions on both sides. What matters, though, is the joint will to actually start tackling the trouble spots.'' Merkel, 51, leader of the Christian Democrats, last week agreed with Schroeder's Social Democrats that she will lead the government. The two sides aim to present their policies by Nov. 12, eight weeks after the Sept. 18 election that plunged Germany into a political stalemate. As part of the agreement that will make her Germany's first woman chancellor, Merkel has given the Social Democrats eight of 14 ministries, including finance, and backed down on some policies. Economists including Thorsten Polleit at Barclays Capital in Frankfurt say that in order to spur growth in Europe's largest economy, Merkel must prevent any further dilution of her ideas. ``There's a risk that the conservatives could signal a scaling-down of reform ambitions in various areas,'' Polleit wrote in a note to investors published Oct. 11. Merkel will announce the line-up of ministers from her party and its Bavarian sister party, the Christian Social Union, at a news conference before the talks start. The Social Democrats announced their cabinet appointments Oct. 13. Outgoing Finance Minister Hans Eichel forecast last month that the deficit this year will be 3.7 percent of gross domestic product, above the EU's 3 percent ceiling for the fourth year in a row. ``It's good that we will soon have a new government,'' said Heinrich von Pierer, chairman of Siemens AG's supervisory board and an adviser to Merkel on economic policy, in an interview in Frankfurt on Oct. 13. ``What we now need are concrete steps to tackle our problems,'' including the budget deficit, reports Bloomberg.

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