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Germany moves Liberal

The grand coalition in Berlin was an expedient response to the electoral maths which the German voters delivered to their politicians. It allowed orderly administration but did not allow either party to change the political weather, given the closeness of the election result, one might well say fair enough to that.

However the grand coalition has also limited much of the freedom of action of the administration. The controversial Nordstream gas pipeline project continues, despite serious concerns about security, largely because the former SPD Chancellor, Gerhard Schroder, has carved himself a role as the Kremlin's international emissary- which the current Chancellor, Angela Merkel is known to have concerns about, though she has felt unable to say so in public.

Although the government has been able to put together a credible set of core policies to face the credit collapse, and is still held in generally high regard, the more dramatic policy prescriptions have not been adopted, simply because they can not be.

However in September 2009, a new general election is scheduled and it is quite clear that the political weather in Germany is changing dramatically. The defeat of the SPD in the state of Hesse has been accompanied by a dramatic rise in support for the Liberal FDP, who have doubled their vote. It seems likely that the grand coalition will lose their control of the upper house of the German Parliament- the Bundesrat- because the SPD result was as bad as it was.

All the evidence suggests that the FDP are headed for an exceptionally strong result in September and will be able to join a new administration under the current CDU Chancellor, but without the Social Democrats. As a Liberal who admires much of the FDP, I am pleased to see such a prospect, but I am also pleased that the SPD will finally be punished for their naked and unprincipled ambition.

At a time when the European Union faces deep challenges, the presence of the economically literate Free Democrats at the heart of government in Berlin can only help to steady the ship.

Meanwhile the increasingly shrill commentary coming from the likes of Ambrose Evans Pritchard in the Telegraph is matched by a much more sober, though sombre analysis from Wolfgang Munchau in the FT . In the end, the bile of the anti-Europeans may end up "all passion spent", as it becomes clear that even the massive devaluation of Sterling that has already taken place has not solved the problems facing the British economy- far from it. Despite the increasingly hysterical assertions that the demonstrations in Riga and Vilnius are "in fact" against Europe, rather than the slow formation of policy in Vilnius and widespread disgust at the corruption of the power elite in Latvia, virtually everybody recognises that the European Union will have a critical role in working out the crisis.

After even in the UK, the appointment of Ken Clarke to the Conservative front bench shows that whatever his public words, the leader of the most avowedly Eurosceptic mainstream political party in Europe accepts the reality that the EU is not going to fall apart and indeed may emerge stronger from this crisis than it was before.

With the intelligent voice of the FDP seemingly set to be heard much more widely in Germany, that is quite possibly a welcome state of affairs.

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