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At the start of her speech the Chancellor named all the victims of the Zwickau-based right-wing terrorist group. She expressed her horror at the extent of hatred and xenophobia uncovered. “These acts are an attack on the very fabric of our society,” said Angela Merkel. She welcomed the proposed compensation for the families that victims have left behind. The war on political extremism is an ongoing fight.

 

Fighting the crisis in the euro zone

 

Angela Merkel’s speech focused on fighting the crisis currently shaking the euro zone. The Chancellor expressed her thanks for the support of the German parliament in the vote on the euro-zone rescue fund on 26 October. “Parliament voted for the future of Germany,” said Angela Merkel. Next year too, the crisis in the euro zone will be top of the political agenda, she said.

 

The reasons for the crisis are the excessive levels of debt in many euro-zone states, the lack of competitiveness and fundamental shortcomings in the structure of the economic and currency union. The instruments needed to cope with the crisis must still be fine-tuned.

 

The Chancellor said that the payment of the next instalment of aid to Greece will depend on all parties in the Greek government signing the reform plan.

 

Restoring confidence on financial markets

 

The Chancellor roundly rejected the proposal of the European Commission to introduce eurobonds. More importantly, she said, limited changes are needed to the European treaties and compliance with the stability regulations for the euro must be better monitored. Hitherto there has been no possibility to intervene when a member state contravenes the provisions of the Stability and Growth Pact.

 

Guidelines are needed for the euro-zone rescue fund (European Financial Stability Facility, EFSF) that are capable of convincing investors. The Chancellor declared that there can be no change to the mandate of the European Central Bank.

 

So as to restore confidence on the financial markets, she advocated greater harmonisation of fiscal law along the lines of a fiscal union. This must be combined with improved competitiveness and performance in the euro-zone states, she said. Only political measures are capable of restoring confidence. The financial sector must serve the market economy and the people, and not vice versa, she said.

 

Levying a financial transaction tax worldwide would be the correct signal that banks must do their part. The Chancellor expressed her regret that no global agreement could be reached on this point, as a result of which she suggested that the matter be examined at European level.

 

Engagement in Afghanistan

 

The Afghanistan conference to be held in Bonn at the beginning of December will discuss the peaceful process of troop withdrawal. “One reason for our presence in Afghanistan is our own security.” That is why, the Chancellor explained, Germany will continue to support Afghanistan even after 2014. She thanked the troops for their foreign missions, particularly in Afghanistan.

 

Speaking about the reform of the Federal Armed Forces Angela Merkel said it would be a particular achievement of this legislative period.

 

What are we going to live from in future?

 

Demographic change is posing a major challenge for Germany, stressed the Chancellor. “We will have more old people, fewer young people and a more diverse population. And there will be fewer of us.” Angela Merkel announced an extension of the nursing care services for patients suffering dementia and their families in particular. The reform of the nursing care system must be very carefully prepared, she said.

 

Parental benefits and childcare benefits will make it easier to combine working and family life, giving people more choice.

 

Shaping the shift to cleaner energies

 

It will also be important to shape the switch to cleaner energies. The switch to renewable energies will take generations, said Angela Merkel. Germany cannot grow without a modern transport infrastructure. The high levels of investment in education and research are vital investments in Germany’s future. The Chancellor reminded her audience too of the wide spectrum of integration work already undertaken.

 

“Those who work must have more than those who do not work,” said Angela Merkel. The rise in the standard level of second-stage unemployment benefit must go hand in hand with a rise in the level of the tax-free allowance.

 

The Chancellor assured her audience that the coalition government will tackle the challenges ahead resolutely in the year to come as they have to date. “It is our goal for our society to be a human, successful society”.