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Strong economy means calm election for Germany

Strong economy means calm election for Germany
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The German election comes as growth has returned to Europe’s biggest economy and the DAX stock market index just hit an all time high.

Germany has rebounded to full economic strength after a fall at the end of last year with recession being narrowly avoided early this year.

Consumers are upbeat, exports and the labour market strong and inflation is largely under control.

David Kohl, Chief Economist for Germany with the Swiss bank Julius Baer said: “Demand for German goods – in particular from developing nations – has been high and this is totally unrelated to German politics, it’s a traditional manufacturing base here. This profited enormously in the past few years.”

German business sentiment was at its highest level in 16 months in August and people say they are now less worried about losing their jobs.

In the five years since the global financial crisis erupted, the number of long-term unemployed in the country has fallen by 40 percent, and there is now a shortage of skilled labour.

Investors are betting there will not be a political upset. The only thing that would spook them is a really strong showing by the left:

Oliver Roth, Head Trader at Close Brothers Seydler in Frankfurt explained: “The markets are pretty much focused on stability and security and that would be guaranteed by a reelection of Angela Merkel. If the socialists have a chance to get into the government, that would be a negative scenario.”

The financial markets will be relieved to have Germany emerge from months of political vacuum when many eurozone problems have been on hold as Merkel avoided backing anything that might have upset voters.

Issues include a third bailout for Greece, more aid for Portugal and the EU banking union.