Three days after the election and the gloss is rapidly coming off Angela Merkel’s return to power.
With the SPD seizing their opportunity to dictate terms for a coalition Merkel is faced with a real dilemma with limited options
1) Form a coalition with the SPD but concede that her hard line on austerity and the euro will be have to be diluted
2) Form a coalition with the Greens/A N Other but face the fact that it would be a fragile majority
3) Return to the polling booths for another election in an attempt to establish a stronger power base
With the SPD due to meet this Friday we can expect them to be coming back to the negotiating table fired up and demanding more from Merkel than their initial reaction or size of vote indicated
These are difficult times for Mrs M and the CDU, and another dose of political uncertainty in the Eurozone can not be good for the currency as I wrote previously.
