“Similar to what Tony Blair and Gerhard Schroeder did in the 1990s and 2000s, she has adopted the most popular policies of her opponents – at least rhetorically.” Merkel embraced the phasing out of nuclear power, increased public spending on childcare and family benefits and offered a watered-down form of minimum wage to neutralize the center-left. A lurch to the left did not help the SPD regain much ground as core voters are still angry over painful reforms in the last decade that cut unemployment benefits and raised the retirement age, even though they are now credited with restoring German competitiveness. CREDIBLE SOCIAL JUSTICE? The policy dilemma confronting the European left is how to offer a credible, modern vision of social justice. Reformers such as Policy Network’s Cramme argue that the only salvation lies in emphasising “pre-distribution” through investment in childcare, education and job training, rather than perpetuating blanket welfare handouts. “Defending acquired rights may be legitimate, but it no longer makes you a catch-all people’s party,” Cramme said. “If you want to be a big-tent party again, you will have to combine reformist elements with social protection.” This leaves the center-left with awkward choices. Its big batallions of supporters tend to be among public employees and unionized industrial workers with strong job protection and secure pensions who fear privatization, and resist easier hire-and-fire regulations and later retirement. In some northern European countries such as Denmark, social democratic parties have pinned their fate on embracing an open, globalised economy and making social protection more selective. “We are trying to do four things at the same time,” Thorning-Schmidt said in an interview in her Copenhagen office, drawing four points on a piece of paper. “Fiscal constraint – call it austerity – (and) on the other side growth measures.
On a more upbeat note, shares of Electricite de France SA /quotes/zigman/396068 FR:EDF +2.20% climbed 2.2% as the utility firm closed in on sealing a 14-billion-pound ($22.4 billion) deal to build and operate nuclear reactors in the U.K. Heavyweight Vodafone gained 0.8% after the telecom firm said it completed the takeover of Kabel Deutschland Holding AG /quotes/zigman/590596 DE:KD8 +0.30% . U.S. deadlock More broadly, the losses in Europe came 14 days into the U.S. government shutdown and three days before the country is expected to reach its borrowing limit, unless lawmakers break a stalemate and raise the nations debt ceiling. On Sunday, Senate Republicans and Democrats leaders continued attempts to find a way to break the fiscal impasse between the Republican-led House and President Barack Obama. Read: Fed shutdown and your retirement: Remain calm Treasury Secretary Jack Lew has warned the U.S. will run out of borrowing authority on Oct. 17 unless Congress agrees to raise the debt ceiling. A failure to increase the limit could lead to a technical default, which some fear will drag the economy back into recession . U.S. stocks traded lower on Wall Street . China and Europe data Meanwhile in China, data over the weekend showed a surprise decline in exports in September , signaling the global economy is still struggling to recover. Additionally, Chinese consumer prices rose faster than expected in September, though remaining within the governments target range. On the data front in Europe, Eurostat said industrial production rebounded in August in the euro zone, rising 1% month-on-month.