Difficult times for Sarkozy, Merkel and Berlusconi

The three centre-right leaders of the eurozone's largest economies, France's Nicolas Sarkozy, Germany's Angela Merkel and Italy's Silvio Berlusconi are all going through a difficult phase as they introduce austerity measures and cut down on public spending.

They have all witnessed a drop in their poll ratings and they have to deal with internal divisions within their ruling parties.

Furthermore, in France and Italy, the personalities of Sarkozy and Berlusconi, as well as allegations of corruption, have also been linked to a drop in the opinion polls. In Germany, Merkel has been accused of stifling dissent within her ruling CDU, which has led to some unease among voters.

The French President has been linked to a party funding scandal and his domestic agenda has not been particularly successful, even though most observers believe he reacted quite well to the global financial crisis. However, his promised radical economic reform - most notably the labour market and the public sector - has hardly materialised.

Sarkozy has, in fact, promised a major reshuffle in the autumn as he contemplates politically sensitive issues such as pension reform and spending cuts as well as the 2012 presidential election. Analysts believe he will bring senior centre-right politicians and new rising stars into the government as well as political figures from outside his own UMP in order to weaken the opposition parties.

Nobody knows whether Sarkozy will keep his Prime Minister, François Fillon, as he attempts to give his government a new look. However, Fillon remains a popular figure in France, far more popular than the President, and removing him would be a bad move which could lead to further dissent within the UMP's backbenchers.

The latest news from Germany's most populous state, North Rhine Westphalia, is certainly not good for Merkel. A minority centre-left government has been formed between the Social Democrats and the Greens, nine weeks after the election in the state which deprived the centre-right government of its majority in the Bundesrat, the upper house where the federal states vote, but which led to no political bloc winning an overall majority of seats.

If this minority red-green coalition proves to be a moderate stable solution - although it has to depend on the abstention of the left-wing (mainly former Communist) Linke party, which is both embarrassing and risky - then this might suggest to voters that a similar coalition could be feasible in Berlin, even though the next election is not due until 2013.

Opinion polls in Germany show a sharp swing from the centre-right to the centre-left. Support for Merkel's Christian Democrat - Liberal coalition has plummeted from 48.4 per cent last autumn to 35 per cent, compared to 45 per cent for the combined Social Democrat - Green bloc, which suggests that no one bloc can command an overall majority.

Furthermore, six Christian Democratic state premiers have stood down in under a year, for a variety of reasons, including electoral defeats and disagreements with Merkel, thus depriving the CDU of much needed talent and experience.

Merkel has disappointed many people in the business community, who form part of her natural constituency, and she has failed to properly explain to the German public why she had to support Greece in its debt crisis.

Italy is presently going through a phase of corruption investigations involving politicians, businessmen and judges, including one which is looking into a secret society allegedly involving Berlusconi's closest aides. Furthermore, the Prime Minister has had to accept the resignation of three ministers since May and many Italians are becoming increasingly sceptical with their political parties.

There also appears to be some tension between Berlusconi and Gianfranco Fini, the president of Parliament and co-founder of the ruling People of Liberty party, who previously headed the National Alliance party. Berlusconi has even dared Fini to carry out his threat of forming a breakaway faction of the party, which could deprive the Prime Minister of his parliamentary majority, depending of course on how many MPs follow Fini.

Some observers believe Berlusconi will take a risk and call an early election next year which he could well win because he remains relatively popular and the opposition leader, Pierluigi Bersani, has failed to make an impact with the electorate.

Some analysts believe Berlusconi's ultimate goal is to become President of the Republic in 2013, which he could engineer should he be re-elected to government in an early election.

In all three countries, the traditional centre-left parties have not been able to take advantage of the governments' slump in popularity - with the possible exception of Germany, but even there it is the Greens rather than the Social Democrats which have surged ahead in the polls. What is perhaps worrying is that certain fringe parties are increasing in popularity such as the German Left party, the French Europe Ecologique party and the Italian Northern League - which is actually part of Berlusconi's coalition government.