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My Profile Top News Reuters top ten news stories delivered to your inbox each day. Subscribe You are here: Home > News > International > Article Home Business & Finance News U.S. Politics International Technology Entertainment Sports Lifestyle Oddly Enough Health Science Special Coverage Video Pictures Your View The Great Debate Blogs Weather Reader Feedback Do More With Reuters RSS Widgets Mobile Podcasts Newsletters Your View Make Reuters My Homepage Partner Services CareerBuilder Affiliate Network Professional Products Support (Customer Zone) Reuters Media Financial Products About Thomson Reuters Merkel eyes centre-right as election nears Wed Sep 23, 2009 10:34am EDT Email | Print | Share | Reprints | Single Page [-] Text [+] By Noah Barkin BERLIN (Reuters) - Chancellor Angela Merkel looks on track to win a second term in a German election on Sunday and may be able to form the center-right government that eluded her four years ago, final polls published before the vote indicated. After running an awkward "grand coalition" with her main political rivals, the center-left Social Democrats (SPD), since 2005, Germany's first woman chancellor is hoping to team up with the business-friendly Free Democrats (FDP) this time around. As leader of a center-right government, Merkel would be expected to pursue cuts in income, corporate and inheritance taxes as well as extend the life of nuclear plants that are scheduled to be phased out over the next decade. Germany is emerging from its deepest recession since World War Two and the next government will have to rein in a surging budget deficit, cope with rising unemployment and confront a fragile banking sector which has pared back lending as it struggles to emerge from the crisis. "The economic challenges for the next government are clear," said Joerg Kraemer, chief economist at Commerzbank in Frankfurt. "They must bring down the deficit and create an environment in which German firms hire." A survey by Forsa for Stern magazine, probably the last to be published before the vote, gave Merkel's conservatives a nine-point lead over the SPD, which would virtually ensure she wins a new four-year term. The Forsa survey mirrored the other polls released over the past few days in giving Merkel's conservatives and the FDP a parliamentary majority. Center-RIGHT LEAD WAFER THIN But it also showed that majority is wafer-thin, with conservatives on 35 percent and the FDP on 13 percent, a mere percentage point ahead of the three other big parties -- the SPD, environmentalist Greens and far-left "Linke," or Left. The most likely alternative if the conservatives fail to get a center-right majority is another "grand coalition" with the SPD, an awkward partnership of rivals that had existed only once in the late 1960s before Merkel was forced into one in 2005. She worked surprisingly well with the SPD over the past four years, repairing ties with the United States after the strains of the Iraq war, consolidating the budget before the crisis hit and introducing stimulus packages worth 81 billion euros to fight off the downturn. But analysts fear a new grand coalition would be less stable and harmonious, in part because of divisions within the SPD. Merkel's hopes of avoiding a grand coalition could hinge on her Christian Democrats (CDU) winning what pollsters estimate could be up to 20 additional "overhang" seats in parliament. These seats result because each voter in Germany casts two ballots -- one directly for a candidate in his or her constituency and the second for a party. If a party wins more direct seats than it would theoretically get according to the percentage of second votes, the Bundestag, the lower house, creates extra seats. Continued... View article on single page Share: Del.icio.us Digg Mixx Yahoo! Facebook LinkedIn Next Article: Doubts loom large after Obama's Mideast summit Pittsburgh G20 summit Bankers pay and the need to examine strategies for withdrawing state stimulus for the global economy have dominated debate ahead of a G20 summit in Pittsburgh on September 24-25. Full Coverage Path forward to Pittsburgh G20 summit More International News Honduras standoff at Brazil embassy set for long haul | Video Doubts loom large after Obama's Mideast summit Qaeda's Zawahri attacks Obama, Arabs in new video Dust storm blankets Sydney as drought bites | Video Dutch pilot held over Argentine "death flights" More International News... Related News German pollsters brace for another late shift 8:57am EDT Q+A: German election may be decided by "overhang" seats 8:57am EDT Q+A: Coalition talks after the German election 8:57am EDT FACTBOX: Achievements, failures of Merkel's grand coalition 8:57am EDT FACTBOX: Possible coalitions after German election 8:57am EDT FACTBOX: German Chancellor Angela Merkel 8:57am EDT FACTBOX: German Free Democrat leader Guido Westerwelle 8:57am EDT FACTBOX: Election policies of Germany's leading parties 8:57am EDT FACTBOX: Likely cabinet members in a new German government 8:57am EDT FACTBOX: German SPD candidate Frank-Walter Steinmeier 8:57am EDT Featured Broker sponsored link Editor's Choice Slideshow A selection of our best photos from the past 24 hours. Slideshow Most Popular on Reuters Articles Video U.S. to push for new economic world order at G20 | Video Q+A-Is Australia's dust storm linked to climate change? 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