Economic ills drive Kohl into coalition pact

Germany's vast economic problems have driven Helmut Kohl into the embrace of the opposition, opening the way to a grand coalition in all but name.

Under a deal to be thrashed out on Monday by Mr Kohl and Oskar Lafontaine, the leader of the Social Democrats, the big-gest opposition party will co-sponsor the tax reform bill, and will be consulted on this year's spending cuts. As a consequence of their pact, Mr Kohl will no longer be able to tout the tax package as his own in next year's election campaign.

In return, the Social Democrats will be able to tilt taxation in favour of their members, and gain valuable influence in government after 15 years in the political wilderness. But both sides stress that all Germans will benefit from the arrangement, because many of the urgent reforms the country needs to regain its competitiveness will be introduced in 1998.

Rocked by spiralling unemployment and internal strife, the government has abruptly ditch-ed its intransigence, and is now striking a meek tone in its dealings with the opposition. Wolfgang Schauble, Mr Kohl's deputy, yesterday gave the first clear indication that the Social Democrats' vision of social justice can be accommodated.

The SPD appears willing to accept a cut in the top rate of income tax from 53 to 39 per cent, but are holding out against changes that would hit blue-collar supporters. Mr Schauble suggested that he would be prepared to "compromise" over new taxes introduc- ed for overtime and weekend work - the opposition's main bone of contention. The Social Democrats are also firmly opposed to an increase in VAT to compensate for revenue lost in the top bracket.

The government is also looking for savings of several billion deutschmarks this year in its effort to meet the Maastricht criteria for monetary union. Though it has a comfortable enough majority in the Bundes- tag, many welfare cuts must be approved by the Social Democrat-controlled upper chamber, the Bundesrat. The opposition had promised a gridlock, and so far it has been true to its word.

The rapprochement over the next months will shift the thrust of government policy towards the left, outflanking Mr Kohl's right-wing junior coalition partners, the Free Democrats, who have been holding the Chancellor hostage to their laissez-faire agenda. Mr Kohl himself will only benefit in the long term if he succeeds in reducing unem-ployment before the elections.

However, Europe's longest-serving statesman is slowly reasserting himself. In recent polls, he has re-emerged as the Christian Democrat with the highest personal rating. All that is needed now is the announce- ment that, with the greatest reluctance, he is willing to lead his party into the next elections.

Mr Kohl had not planned to make a statement until summer, but internal unrest has forced his hand. Addressing a closed meeting of Christian Democrats earlier this week, he said: "I know my duty," he said in an emotional speech described by the party faithful as "vintage Kohl".

Start your day with The Independent, sign up for daily news emails
Have you tried new the Independent Digital Edition apps?
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Recruitment Genius: Web Developer - Junior / Mid Weight

£15000 - £25000 per annum: Recruitment Genius: To support their continued grow...

Recruitment Genius: Marketing Data Specialist

£22000 - £25000 per annum: Recruitment Genius: They are the go-to company for ...

Recruitment Genius: Search Marketing Specialist - PPC / SEO

Negotiable: Recruitment Genius: This is an opportunity to join the UK's leadin...

Recruitment Genius: Sales Administrator

Negotiable: Recruitment Genius: This caravan dealership are currently recruiti...

Day In a Page

Is this the future of flying: battery-powered planes made of plastic, and without flight decks?

Is this the future of flying?

Battery-powered planes made of plastic, and without flight decks
Isis are barbarians – but the Caliphate is a dream at the heart of all Muslim traditions

Isis are barbarians

but the Caliphate is an ancient Muslim ideal
The Brink's-Mat curse strikes again: three tons of stolen gold that brought only grief

Curse of Brink's Mat strikes again

Death of John 'Goldfinger' Palmer the latest killing related to 1983 heist
Greece debt crisis: 'The ministers talk to us about miracles' – why Greeks are cynical ahead of the bailout referendum

'The ministers talk to us about miracles'

Why Greeks are cynical ahead of the bailout referendum
Call of the wild: How science is learning to decode the way animals communicate

Call of the wild

How science is learning to decode the way animals communicate
Greece debt crisis: What happened to democracy when it’s a case of 'Vote Yes or else'?

'The economic collapse has happened. What is at risk now is democracy...'

If it doesn’t work in Europe, how is it supposed to work in India or the Middle East, asks Robert Fisk
The science of swearing: What lies behind the use of four-letter words?

The science of swearing

What lies behind the use of four-letter words?
The Real Stories of Migrant Britain: Clive fled from Zimbabwe - now it won't have him back

The Real Stories of Migrant Britain

Clive fled from Zimbabwe - now it won’t have him back
Africa on the menu: Three foodie friends want to popularise dishes from the continent

Africa on the menu

Three foodie friends want to popularise dishes from the hot new continent
Donna Karan is stepping down after 30 years - so who will fill the DKNY creator's boots?

Who will fill Donna Karan's boots?

The designer is stepping down as Chief Designer of DKNY after 30 years. Alexander Fury looks back at the career of 'America's Chanel'
10 best statement lightbulbs

10 best statement lightbulbs

Dare to bare with some out-of-the-ordinary illumination
Wimbledon 2015: Heather Watson - 'I had Serena's poster on my wall – now I'm playing her'

Heather Watson: 'I had Serena's poster on my wall – now I'm playing her'

Briton pumped up for dream meeting with world No 1
Wimbledon 2015: Nick Bollettieri - It's time for big John Isner to produce the goods to go with his thumping serve

Nick Bollettieri's Wimbledon Files

It's time for big John Isner to produce the goods to go with his thumping serve
Dustin Brown: Who is the tennis player who knocked Rafael Nadal out of Wimbeldon 2015?

Dustin Brown

Who is the German player that knocked Nadal out of Wimbeldon 2015?
Ashes 2015: Damien Martyn - 'England are fired up again, just like in 2005...'

Damien Martyn: 'England are fired up again, just like in 2005...'

Australian veteran of that Ashes series, believes the hosts' may become unstoppable if they win the first Test