German chancellor Angela Merkel has said bankruptcy rules will be eased for flood-hit businesses.
Floods have been tormenting German regions with an estimated total damage cost of €12bn, according to Fitch Ratings. The government has already promised an aid fund of up to €8bn to help affected residents and businesses recover. Merkel has said taxes will not need to be increased to raise the money for the fund.
Merkel officially launched her campaign for a third term as chancellor yesterday, warning that Germany would lose its recent gains if a “red-red-green” coalition (referring to the Social Democrats, Die Linke and the Green Party) in September. She has pledged a continued push to consolidate the budget and vowed not to raise taxes – as well as increasing social benefits for mothers. While members of the opposition say the figures don’t add up, the Finance Ministry has predicted Germany will have a balanced budget in 2014 – and maybe even a surplus.
Opinion polls suggest that Merkel will remain chancellor, but that the centre-right coalition of her Christian Democrats and the Christian Social Union may not have a majority.
As Merkel looks to avoid controversy on the run-up to the election, it is thought that negotiations over a European banking union will be kept on hold until afterwards. The sluggish pace of negotiations on the issue so far is already irking a few policymakers, with Italian prime minister Enrico Letta saying last week that, "if we don't discuss a common resolution of banks in crisis at the next meeting, I have a feeling that the December 2013 deadline for this will also not be met”.