Explainer-What are the main issues in Germany's federal election?


FILE PHOTO: The German flag is seen outside Germany's Bundestag, the lower house of parliament. in Berlin, Germany, March 14, 2018. REUTERS/Hannibal Hanschke/File Photo

BERLIN (Reuters) - The manifestos presented by the parties vying to form Germany's next government set out very different visions for the future of the country, and Europe, after September's federal election.

At stake is the direction that Germany, Europe's largest economy, will take after Angela Merkel's departure as chancellor. In power since 2005, she plans to stand down after the Sept. 26 election.

The conservatives promise voters "stability and renewal" in their manifesto. Their main rivals are the ecologist Greens, followed by the left-leaning Social Democrats (SPD) and the business-friendly Free Democrats (FDP).

WHAT HAVE BEEN THE BIG CAMPAIGN ISSUES?

Trust. Who can Germans rely on to take over from Merkel, who has guided them through the euro zone crisis, the 2015 migrants crisis and now the coronavirus pandemic?

The conservative candidate for chancellor, Armin Laschet, highlights his experience governing Germany's most populous state, North Rhine-Westphalia.

The Greens' candidate, Annalena Baerbock, has countered that with the promise of a "new start".

FDP leader Christian Lindner also says Germany cannot rest on its laurels and needs to adapt to a fast-changing world.

The SPD's Olaf Scholz, finance minister in Merkel's "grand coalition", presents himself as a safe pair of hands.

WHAT ABOUT DIFFERENCES ON POLICY?

Much of the policy debate was framed when a top court ruled in late April that Germany must update its climate law by the end of next year to set out how it will reduce carbon emissions to almost zero by 2050.

The conservatives want to achieve greenhouse gas neutrality in 2045, as does the SPD. The Greens are more ambitious and want to achieve neutrality in 20 years through "a massive expansion offensive for renewables". The FDP references Germany's goal of achieving climate neutrality by 2050.

Climate policy, and how to pay for the adjustment to a cleaner environment, is closely linked to divisions over public finances and taxation, and feeds into policy towards the European Union.

HOW TO BALANCE THE BOOKS?

The conservatives promise gradual tax relief and a commitment to Germany's constitutionally enshrined debt brake, which limits new borrowing to a tiny fraction of economic output but which has been suspended during the coronavirus crisis. It is unclear how they will ease the tax burden, a pledge that aligns them with the FDP, and keep a lid on the debt.

The Greens want to lower the threshold for those paying the top tax rate of 45% and to introduce a 48% band for ultra-high earners. They also want to reform the debt brake to promote public investment.

The SPD wants to help those on small and medium incomes and hike taxes for the top 5%.

WHAT ABOUT EUROPE?

Both the conservatives and the FDP reject a "debt union" and want to ensure that joint EU borrowing to finance the bloc's coronavirus recovery package remains a one-off.

The Greens, by contrast, favour a common European fiscal policy to support investment in the environment, research, infrastructure and education.

The SPD sees the recovery package as the basis for building new trust in Europe and has talked about taking steps towards a fiscal union.

WHO IS LIKELY TO GOVERN?

No party is on track for a majority on its own, so Germany will once again be ruled by a coalition after the election, though the SPD does not want to play junior partner to the conservatives again.

The conservatives and FDP, partners in the past and aligned on important issues, would like to join forces but opinion polls suggest they will lack the numbers to form a government.

The conservatives and Greens may have enough support to govern, but are at odds on a host of issues. German President Frank-Walter Steinmeier may need to press them to resolve their differences.

The Greens would rather lead a government with the SPD and FDP. The FDP has been cool on that idea, but may be forced to make a decision before the election if the Greens claw back support in the opinion polls.

A conservatives-Greens-FDP tie-up is also possible, though talks on such a coalition collapsed after the last election in 2017.

If the conservatives win most votes, Laschet is likely to be chancellor - with either the Greens, or FDP, or both in support.

(Writing by Paul Carrel, Editing by Timothy Heritage)

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