Super election year in Europe A perspective from

Super election year in Europe - A perspective from Germany on the New International Order Presentation for Aalborg University September 2017 Ambassador Friis Arne Petersen 1

Agenda 1. Super election year in Germany 2017 2. Germany in Europe and the world 3. German Economy 4. Opportunities for Denmark and Danish-German cooperation 2

1. Super election year in Germany 2017 • The federal assembly (The federal president – 12. 02) • • Four state elections - Saarland (26. 03) - Schleswig-Holstein (07. 05) - North Rhine-Westphalia (14. 05) - Lower Saxony (15. 10) Parliamentary election (24. 09)

The Schulz effect, which disappeared Kilde: http: //wahl. tagesspiegel. de/2017/, 05. 09. 17 4

Topics of the election campaign

What does Merkel and Schulz want? - The setting of the election campaign - • Strong public finances: economic latitude of 54 bio. euros towards 2021 according to projection from May, from the Ministry of Finance • Caused by strong economic growth (+21 pct. since 2010) and disproportionately rising tax revenues, among others due to an unchanged treshold for top-bracket tax payment (+32 pct. since 2010) à A general main theme in the election campaign: tax reductions or public investments? 6

What does Merkel and Schulz want? - Statements on domestic policy Merkel: Election platform: Für ein Deutschland, in dem wir gut und gerne leben Schulz: Election platform: Gerechtigkeit – Zukunft – Europa - Tax reform: Relief on income tax of at least 15 billion euro per year med - - Relief for families with children: Increase the child tax credit to 1500 euro per year, increase child support with about 40 euro per month and relief families with children who buys property. Rise in public investments of at least 30 billion euro in the coming election period for free childcare in day care centers (Kitas), education, research and infrastructure. - Reform of the unemployment benefits: Longer period of benefits for unemployed elderly, more skill development for unemployed people. - Tax reform: Tax reduction for low- and middle incomes (15 billion euro per year) – tax rises for the 20% richest. - Pension reform: Freeze the retirement age at 67 up to and including 2030 and secure a contribution - - Internal security: Continue returning denied asylum seekers, electronic tag for ”dangerous” rejected asylum seekers etc. Full employment (unemployment rate of max. 3 pct. ) before 2025 and an immigration law focusing on attracting qualified labor.

Popularity of Merkel and Seehofer 8

Political stability in Germany: 8 Chancellors since 1949. Served in average 8, 5 years Denmark: 17 Prime minister since 1949. 13 without re-election Served in average 4, 2 years

2. Germany in Europe - The dominating nation in Europe -

Germany in the world - The beginning of a new international order? - ”The time where we could trust each other completely , is on its way out. This I have experienced myself in recent days. Therefore I can only say: We Europeans truly have 11 to take our destiny into our own hands” Quote: Merkel at a election meeting with CSU, Munich, May 28.

Support for EU after Brexit More EU-supporters than EU-opponents and an increasing EU -support More EU-supporters than EU-opponents, but a declining or stagnating EU-support Fewer EU-supporters than EU-opponents, but an increasing EU-support Fewer EU-supporters than EU-opponents, but a declining or stagnating EU-support 12

China – a growing great power Source: IMF Economic Outlook 13

Expected economic growth 2016 -2019 Source: the World Bank

3. German economy • • The German economy appears to defy risk factors. Positive development in purchasing power, demand, consumption, and public expenditure. Regeringens forårsprognose, maj 2017 Nøgletal 2016 2017 2018 GDP Export 1, 9 2, 6 1, 5 3, 3 1, 6 3, 8 Import 3, 7 4, 5 4, 7 Gross fixed asset investment 2, 3 2, 9 Construction 3, 0 2, 9 2, 7 • Strong public finances Private consumption 2, 0 1, 4 Public Expenditure 4, 0 2, 6 1, 6 • The number of employed persons is record high and the unemployment rate is among the lowest in Europe. Labor market (absolute numbers in millions) Employment 43, 5 44, 1 44, 4 Unemployed 2, 69 2, 55

Development in unemployment 1980 - 2014

For years German labor market was characterized by rigid structures • High degree of protection against dismissal (Kündigungsschutz) • German labor is relatively expensive (due to large contributions for social security) • Clear divisions between the parties on the labour market • Relatively generous benefits for long-term unemployed • Limited focus on the active labour market policy • Relatively low job mobility

Hartz-reforms • Deregulation of work as a substitute • Increase the amount for minijobs • Institutional restructuring • Significant cut in benefits for unemployed

German export, 2016

German import, 2016

4. Opportunities for Denmark and Danish-German cooperation

Denmark – Winner of the EU Single Market

Denmark – an open economy Export as pct. of GDP 1970 -2016

Danish export of goods to the German Länder, 2016 Italien: 15, 7 mia. kr. Belgien: 9 mia. kr. Polen: 18, 4 mia. kr. Østrig: 4, 2 mia. Kr. Australien: 5, 8 mia. kr. Source: Statistisches Bundesamt, Wiesbaden, 2016

Government strategy for Germany • Increased focus on Southern Germany: Consulate General in Munich, incubator facility (2017), strengthened innovation counseling. • Simultaneously strengthened presence in Northern Germany: Consulate General in Hamburg. • Increased cooperation with German authorities in priority sectors (energi/construction, digitization, health). • SMV-effort: New SMV-initiatives (DKK 2. 5 mio. in 2016/17), support for the participation of SMV’s at fairs and campaigns, as well as support for Danish export in Germany. (DKK 10 mio. ) • Work persistently to realise the Fehmarnbelt project.

Meet the world in Germany • Aid specifically for export drives and participation in fairs in Germany • 2, 6 mio. foreign visitors at 164 national fairs in Germany (2015) • A joint Danish stand at the world’s largest industrial fair in Hannover is organized by Cf. U, the manufacturing industry and The Trade Council for Germany.

The Fehmarnbelt project • The Fehmarnbelt connection will consist of a four-lane highway and a two-lane electrified railway. The connection will be constructed as a immersed tunnel. • Expected price: DKK 55, 1 billion • The connection is expected to be open for traffic in 2028

Thank you for your attention