When needs must

To remain as German Chancellor for another term, Angela Merkel has had to make serious concessions. The most important of these is a commitment to spend budget surpluses and to support the SPD’s pro-European agenda by converting the European Stability Mechanism into a European Monetary Fund. With labour markets tightening and higher fiscal spending on the horizon, growth should remain robust. This will support the euro and exert upward pressure on bund yields.

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