The big news from Germany’s elections was what did not happen: Angela Merkel, the right-wing candidate who had a free fall from a 20-point lead, did not become the first woman chancellor. The incumbent, Gerhard Schröder, was not driven into retirement. Germans did not give either a governing majority. Still, they delivered a message: economic reform should move forward.

Given Germany’s dismal economic health, there is no alternative to reforms for Germany and for Europe as a whole. Merkel seemed to be doing well against Schröder, a highly skilled candidate, until she blundered by picking Paul Kirchhof, a professor who advocates a flat tax, as her economic spokesman. As for Schröder, drawing even with Merkel’s party was a vindication of the risk he took in calling the poll to gain a mandate for reforms. The arithmetic now makes for some complicated possibilities. The most likely outcome seems to be a coalition of Schröder’s party and Merkel’s party. Such a “grand coalition” is widely discredited outside Germany as unstable and incapable of agreeing on policy. But coalitions between the two major parties have worked well in the German states. If the two major parties look beyond their rivalries, they could find that they agree on the basics of critically needed economic reforms.