It should go without saying that this weekend’s German elections mean an awful lot not only to Germany, but also to Malta and to Europe as whole.

German companies, particularly industrial concerns, represent a considerable segment of Malta’s foreign direct investment and many of them have been operating here in Malta here for several decades and employ several hundred workers.

In terms of tourism, Germany is Malta’s second-largest core tourism market and the English language teaching tourism segment is also heavily dependent on German business – from the business and private sphere alike.

And while the German elections, whatever the outcome, are not expected to present and significant danger to either area, it is undeniable that a slackening of German business or consumer confidence as a result of the election could lead to a drop in business.  Conversely, should the result of Sunday’s election result in a boost of confidence, the trickledown effects could, instead, be positive.

More widely speaking, the results of this weekend’s polling in Germany could mean a lot for the European Union and its future course in so many areas  - Angela Merkel, Germany’s current Chancellor,  is said to be the world's most powerful woman, the country is Europe's most powerful economy and its industrial output is practically unparalleled the world over.

Since Greece's debt troubles catalysed Europe's sovereign debt crisis nearly four years ago, Germany's economic clout has made it the country without which few significant decisions can be made in Europe.   Given Germany’s influence on Europe, the ramifications of the elections will certainly have an impact on the way in which the eurozone and all the lingering aspects of the sovereign debt crisis are handled.

Not only that, but the future identity of the European Union also hangs somewhat in the balance, with Chancellor Merkel in favour of the more controversial federalist, United States of Europe approach to the bloc’s governing – a position that grew out if the sovereign debt crisis itself.

The new German government is generally expected to take up sweeping reforms for the 17 countries that use the euro currency. That could easily lead to some public spats between government leaders, especially if Greece runs into trouble again.

Germany's elections will likely push Europe's debt problems back into the spotlight, if only because of what happens afterward. Chancellor Angela Merkel's party currently leads in polls, so many investors are banking on Merkel getting a third term in office with a stronger government.

But with Germany's national election just days away, polls suggest trouble for Chancellor Merkel's coalition despite her own personal popularity. A survey released on Tuesday by Stern magazine and RTL television show Merkel's Christian Democrats at 39 per cent — unchanged from last week. But her junior coalition Free Democrats dropped a percentage point to five per cent.  The Social Democrats polled 25 per cent, the Left Party 10 per cent and the Greens nine per cent — all unchanged.

But beyond any doubt, the outcome and coalition formed in the aftermath of Sunday’s election will have an impact on the country's positions on European issues.

Overall, the core positions of the top candidates, Angela Merkel and Peer Steinbrück, are relatively close.  Merkel represents German society’s middle ground and Steinbrück is known as a fiscal conservative, having served as finance minister between 2005 and 2009.

Whatever the case, the next German government will undoubtedly be a coalition, as is the case at the moment with Merkel’s Christian Democrats and the Liberal party sharing power.  Should this coalition stay in power, Merkel could very well be emboldened to push ahead with her plans for a more federalised Europe, although enthusiasm for the concept is becoming more limited in Germany and in Europe.  On the banking union currently under formulation, a re-elected Merkel government, according to German pundits, will push ahead for a compromise with France.

The options are wider under other coalition configurations. Germany’s insistence on fiscal consolidation in the crisis countries might soften a little, but it would not disappear, and a commitment to Eurobonds would remain as unlikely as it is under Merkel, with the German middle classes largely opposing the concept.  

But what political observers say could signify a considerable shift in German policy would be a coalition led by the Social Democrats, with the Greens and the Left Party also on board.  That, according to European pundits, could spell trouble for the financial markets and the more alarmist pundits have warned of potentially huge risks to the German economy and a re-emergence of the euro crisis.

Given the clout of Germany in Europe, much is at stake with this weekend’s elections and much of Europe, and Malta, will be watching the results with bated breath – the results will, after all, define much of the European Union’s discourse and policy formation over the coming years.