Socialist Olaf Scholz elected German leader at the end of the Merkel era

Olaf Scholz was elected Germany’s new chancellor by lawmakers on Wednesday, marking the end of Angela Merkel’s 16 years in power.

Scholz, a member of the socialist party SPD, will lead a tripartite coalition with the Greens and the pro-business party FDP.

Their coalition agreement stood out from previous plans due to an intention to increase investment across the country. However, the pandemic should be their first priority as the new government takes the helm as Germany grapples with high Covid-19 infections and a somewhat stalled vaccination program.

Merkel, first elected chancellor in 2005, received a standing ovation in the German parliament on Wednesday, her last moment in the Bundestag as leader.

“She has presided over a long period of peace and prosperity, ruling Germany calmly and confidently through a series of upheavals and crises,” Holger Schmieding, chief economist at Berenberg, said on Wednesday.

Nationally, Merkel’s tenure will be remembered for higher living standards, higher employment rates and a conservative fiscal stance that allowed government buffers to be built.

Internationally, Merkel will always be known for her open-door policy at the start of the migration crisis in Europe in 2015. This decision not only shaped the wider European discussions on how to handle the crisis, but also influenced anti-immigration rhetoric in various countries.

Separately, her leadership was also marked by the financial crisis of 2008 and the sovereign debt crisis of 2011. While critics argue that Merkel was too tough in pushing austerity policies in the eurozone, supporters argue that this was the only way for her to save the euro and to gain the support of the German Parliament and the electorate.

Otto Fricke, Bundestag member for the FDP, told CNBC’s “Squawk Box Europe” on Wednesday that the last years of Merkel’s reign were marked by a lack of real progress. “This progress [now] must be done, ”he said.