GERMANY: The Social Democrat (SPD) leader designate Matthias Platzeck has promised to continue the economic reforms of departing Chancellor Gerhard Schröder in a new grand coalition government, warning that "tough times are ahead".
His remarks came after it emerged that there is a €70 billion shortfall in next year's federal budget, twice as high as previously thought, forcing further economic cutbacks.
"Germany has probably held the greatest number of conferences about the challenges of globalisation and demographic change but shown the least practical reaction," Mr Platzeck said on German television.
Mr Platzeck, likely to be elected leader at an SPD conference later this month, has set himself a tough challenge. The unpopular economic reforms brought millions of protesters to the streets last year, while reform critics within the SPD drove Mr Schröder to call a snap election and effectively end his political career.
Mr Platzeck's presence at the coalition talks in Berlin will placate concerns from Christian Democrat (CDU) politicians and economists that the SPD was drifting to the left. The party ran a strongly left-wing election campaign and the party executive nominated a left-winger for general secretary on Monday, leading to the resignation of party leader Franz Müntefering.
The SPD and CDU are up against the clock to agree a programme for government in the next ten days, one that will include a four-year freeze on pension increases, further welfare and subsidy cutbacks and a hike in the 16 per cent VAT rate to 18 or even 20 per cent.
Chancellor-in-waiting Angela Merkel, leader of the CDU, has vowed to make Germany's budget meet EU deficit rules by 2007, calling it "a question of destiny for me". Mr Platzeck said he is confident of a long and profitable working relationship with Dr Merkel.
"We know each other well, it's no secret that we come from the same state, Brandenburg, and we have worked professionally for many years with each other," he said, adding it was another stage "on our way to normality" that two easterners, or "Ossis", were now leading Germany's largest political parties.
Germany's best-selling Bild newspaper felt otherwise, screaming "Ossis are now the Bossis" on its front page.
"The fact that one still talks about it in this way shows that we haven't quite reached that normality yet," said Mr Platzeck of the Bild headline. "But we will perhaps be able to do something towards that in the next months and years."
The new SPD leader designate has been greeted on all levels of the party, particularly as he has promised a new leadership style.
SPD executive members had complained that Mr Schröder effectively sidelined them with his strong leadership style.
Mr Platzeck promised "a new openness" and "more responsibility on many shoulders". But it remains to be seen how much openness will be politically possible in a grand coalition with the CDU.