Merkel eyes new coalition after victory

Angela MerkelAngela Merkel swept back into office on Sunday in the German elections after defeating her foreign minister Frank-Walter Steinmeier from the Social Democratic Party (SPD).

It was a disastrous night for the SPD who saw their vote fall ten percent, making it their worst election night since World War II.

In a victory speech to members of her Christian Democratic Union party, chancellor Merkel said her "highest aim" would be to both protect and create jobs for the German people.

Merkel, who was greeted with boisterous singing and chanting of her name, sought to put the celebrations in perspective.

"We can really celebrate tonight," Merkel said, "but afterwards we have a hard job ahead of us."

The results leave the CDU as the strongest party in the German parliament with 27.3 percent of the popular vote -- slightly down on the 27.8 percent they achieved four years ago.

Despite being the biggest party in the Bundestag, the vote marked one of the CDU's poorest showings in an election. But their traditional coalition with the Christian Social Union -- who won 6.5 percent of the vote -- means that the CDU/CSU bloc won 33.8 percent of the vote.

The biggest winners on election night were the Free Democratic Party (FPD) whose share of the vote rose nearly five percent from 9.8 to 14.6 percent.

The collapse of the SPD's vote from 34.2 percent in 2005 to 23 percent now means that Merkel's center-right CDU will likely look to form a new coalition with the FPD.

If, as expected, Merkel forms a new coalition with the FPD it will have wide-reaching implications for Germans.

The FPD are more economically-liberal than Merkel's previous partners the SPD. According to CNN's Fred Pleitgen the FPD led by Guido Westerwelle will push for control some key positions in the new government, including perhaps the finance ministry.

As far as what this means going forward for Europe's biggest economy, Pleitgen believes that economic policy is likely to change dramatically.

"This means a whole lot more pro-business politics for Germany than in the past. You'll probably see tax cuts and it will probably mean smaller government than seen in the past four years," he said.

Speaking at a post-election press conference on Monday chancellor Merkel said that the result is an opportunity to build a smaller government.

"If one looks at the majority relationships, we will be dealing with a smaller partner, the FDP," she said.

"We are happy to use this chance in very difficult economic times to secure jobs, create new ones and drive growth more decisively.