THE BEGINNING OF THE END?

• Position: Election deadlock in Germany may effect EU

Gloomier views of the election deadlock in Germany suggest that paralysis there may signal the beginning of a terminal paralysis for the European Union itself.

Brussels supporters of economic reform have seen their long-expected Merkel/Sarkozy/Brown scenario shattered. The "dream-team" that was going to rescue the EU from its own stalemate has fallen at the first fence. Even if Merkel does head the next government in Berlin, she cannot now drive forward the business-friendly domestic policy she has been advocating.

At the same time, defenders of the social model are relieved at the unexpectedly strong voter support for Schroeder, adducing it as evidence of continued enthusiasm for generous welfare provision.

The new German government, whatever its composition, is obviously going to take a less radical approach to many domestic and European issues than had been hoped - or feared. And this will obviously influence many current EU debates, ranging from the Services Directive to Turkish accession.

But assume an EU meltdown is premature. It is a misreading of the significance of the German result, both in national and European terms.

The outcome is not a rejection of reform, and it is not a rejection of the social model. German voters were aware that Schroeder was already moving in the direction of reform. And...