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The view from Berlin is that everyone else is hesitating to move until they know who is going to win the election. That is especially true in France, Germany’s closest European partner, whose support is seen as essential in Berlin for any future initiative. François Hollande, France’s socialist president, appears to be gambling on his allies in the German Social Democratic party (SPD) joining Ms Merkel’s Christian Democrats (CDU) in a "grand coalition" government. That might give him more backing for a pro-growth agenda in the eurozone.
But would a grand coalition change German policy in the eurozone? Not a lot. SPD policy-makers would no doubt fight to take over the finance ministry from Wolfgang Schäuble as the price of their participation in power. But they would share his hostility to any banking resolution scheme financed by domestic taxpayers – without a German veto.
The truth is that unless there is a big policy shift, then whoever wins in Berlin there will be no rush to reform in the rest of the eurozone, especially if that means treaty change. And Berlin won’t move on anything as controversial as a common bank resolution fund, or eurozone bonds, without treaty change.
There will be a one-year respite in 2016, before 2017, when both France and Germany are back at the polls – and the UK possibly holding a referendum on EU membership. So 2016 will be the one time when a treaty change might be contemplated. Yet the markets may not wait for such an extended electoral cycle. If they are seized by a new bout of nervousness, then Ms Merkel, assuming she is re-elected, may then be more ready to move than Mr Hollande.
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