Merkel pledges help for families, no new taxes

Three months before German elections, Chancellor Angela Merkel promised no new taxes, a balanced budget, family-friendly policies and the ambitious goal of full employment as she presented her party programme Sunday.

She cited globalisation and demographics as the nation's greatest challenges, pledging to help future-proof German industry in the digital age and support family policies in an ageing society with one of the world's lowest birth rates.

She said, with around one percent of the world population, Germany needed strong and united European parters, stressing her position that eurozone countries must push structural reforms and slash debt to survive on the world stage.

"Germany won't do well if Europe isn't doing well," she told a Berlin press conference after her conservative party unanimously passed the 120-page programme ahead of the September 22 election, where she will seek a third term.

"As Germany emerged stronger from the 2008-09 crisis, we want Europe to emerge stronger from the crisis."

And just as Merkel has preached fiscal discipline in the crisis-battered eurozone, she pledged budgetary restraint at home, saying that "we cannot keep living at the expense of future generations".

In what she called a "paradigm shift from the past 40 years", she promised "solid finances, a halt to new debt, repayment of old debt, and investment in the future".

However, despite the pledges of fiscal restraint, Merkel earned criticism from within her own ruling coalition for what they saw as an election-year spending spree.

Economy Minister Philipp Roesler, the vice chancellor and head of the pro-business Free Democratic Party (FDP), charged that the CDU, in election mode, had succumbed to "the sweet poison of spending".

The manifesto had no total price tag, but on infrastructure alone, the CDU and its Bavarian sister party the CSU earmarked 25 billion euros ($33 billion) over four years to upgrade the highway system of what is often said to be a car-obsessed nation.

The party -- which under Merkel has adopted many signature issues of the centre-left opposition -- said it would extend tax breaks for families with children and raise pension entitlements for stay-at-home mothers.

It also pledged to work to cap annual housing rent hikes, and promote minimum wages by state and industrial sector.

On Germany's energy shift away from nuclear and fossil fuels and toward renewables such as wind and solar, the party said that electricity must remain affordable and that the switch must not harm German industry, while also pledging tax breaks to promote research and development.

Merkel -- Germany's most popular politician for what is seen as a no-nonsense and pragmatic leadership style -- remains the favourite to stay chancellor according to most political observers.

The opposition Social Democratic Party (SPD) has under its top candidate Peer Steinbrueck struggled to build campaign momentum as it seeks to win power in alliance with the Greens Party.

At the weekend, after details of the CDU programme were published, the SPD lost no time in attacking it.

The SPD's parliamentary chief Thomas Oppermann labelled the CDU plans "insincerity in print" and charged that Merkel, having failed to implement real reforms, was now "promising everything under the sun".

Within coalition ranks, Roesler in an interview with the Handelsblatt business daily also criticised the "very soft" wording on taxes which he said failed to explicitly rule out future tax hikes.

Roesler pledged that his FDP would not allow tax rises and warned that Merkel's conservatives had to face the fact "that they cannot govern alone and have to make compromises".

For Merkel, whose CDU leads in opinion surveys, the biggest threat comes from the FDP, which has in recent months polled dangerously close to, and at times below, the five percent threshold for re-entry into parliament.

If the FDP were to crash out in the coming election, Merkel would be expected to either seek a "grand coalition" government with the SPD or, as an outside possibility, team up for the first time at the national level with the Greens party.