Germany's new Chancellor -- Good for European funds

December 22, 2005

Germany's parliament voted in its first female head of state. Angela Merkel is also a low-key physicist and economic reformer from East Germany. Many doubt that she has the ability to lead a coalition that will effectively reform Germany's sluggish economy.

Her reforms include an increase to the sales tax, and higher taxes on the wealthiest of Germany's income earners. This is necessary to raise enough government revenue to decrease its budget deficit, and bring it in line with the EU's budget guidelines by next year.

What it means:

Many others feel that Dr. Merkel is exactly the right person to lead Germany out of its 11% unemployment rate over the next four years. She has successfully cobbled together a coalition with Ex-Chancellor Schroeder, and the resultant middle of the road economic strategy may have just the staying power needed over the next four years.

Action Steps:

Simple - make sure your portfolio includes European mutual funds.