Germany's Merkel preparing for new government

By KIRSTEN GRIESHABER, Associated Press Writer

BERLIN – Chancellor Angela Merkel on Monday set about laying the groundwork for her new, center-right coalition with the pro-business Free Democrats after German voters returned her to office for a second term.

Merkel was to hold meetings Monday with leaders of her Christian Democratic Party, to prepare for upcoming coalition talks with the pro-business Free Democrats, whose leader Guido Westerwelle is widely expected to be tapped as her deputy and foreign minister.

Merkel's CDU and its Bavaria-only sister, the Christian Social Union, won 33.8 percent of the vote and the Free Democrats captured 14.6 percent — together enough to ensure a majority in parliament. Merkel's former partner in the uneasy "grand coalition", the Social Democrats, took 23 percent. The Left Party had 11.9 percent and the Greens 10.7 percent.

"We have managed to achieve our election aim of a stable majority in Germany for a new government," Merkel told supporters, beaming despite her party's worst showing since 1953.

The result gave the conservatives 239 seats and the Free Democrats 93 in the lower house — for a comfortable center-right majority of 332 seats to 290. The Social Democrats won 146, the Left Party 76 and the Greens 68.

Merkel, 55, had said she would hold "swift and decisive" coalition talks with Westerwelle. The new center-right government is expected to lower taxes in an effort to spur growth and create jobs.

Germany's economy — Europe's largest — has been badly hit by the downturn. Though it returned to modest growth in the second quarter and business confidence is rising, gross domestic product is still expected to shrink by 5 percent or more this year — easily the worst performance since World War II.

That is expected to create hurdles for the next government because a rising budget deficit bloated by stimulus spending during the crisis will make it harder to deliver the promised tax cuts.

"We are ready to take on this responsibility," Westerwelle, 47, told his supporters at the party's election night celebration in Berlin.

Free Democrat deputy leader Andreas Pinkwart told WDR television his party would remain steadfast in its push for tax relief, "above all for families with children."

"Among the leading industrial nations, there is hardly one with such a high tax burden for families as in Germany," Pinkwart said.

Among the thorniest issues that face the new government is its participation in the NATO-led mission in Afghanistan. In the weeks ahead of the election, extremists from al-Qaida and the Taliban both issued messages aimed at Germany, including threats of retaliation if they did not withdraw their 4,200 troops.