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23 September 2013

FN: German election results revive FTT threat

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With the Free Democrats' defeat, Merkel now faces the prospect of forming a coalition government with the left-leaning Social Democrats, who have publicly stated their support for an FTT.

James Hughes, an account manager at lobbying group Cicero, said in an e-mailed statement: "I would have thought that relative to some of the other possible scenarios, this does make an FTT more likely. Social Democrat support for the FTT is well known. If they form part of the coalition as looks likely, we can expect them to maintain momentum for the FTT. Had the Free Democrats retained its place in the coalition, then we could have expected momentum to have slowed."

Gary Richards, a corporate tax partner at law firm Berwin Leighton Paisner, said: "We will get much a better feel for the political situation by end of the week, but a coalition with the Social Democrats looks most likely and they, publicly at least, seem to be pro the FTT." 

However, he added that the overwhelming nature of Merkel's victory – she secured 41 per cent of the vote, 8 per cent more than in 2009 – meant that her opinion would count the most. Richards said: "She has done so well that coalition partners know they can't bargain too hard, and the FTT is something of a technicality anyway. She's been very much tapping into mood of people – she would be reluctant to support the tax in its current form if it impacted German businesses too much." "Everyone is looking to the German Chancellor's approach, and if she says the FTT should be introduced in a limited fashion, there will probably be some back and forth, but that is what will happen - a push back towards some sort of EU-wide stamp duty", he added.

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© Financial News

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