ANGELA MERKEL will embark on a lightning tour of European capitals, including London, after being sworn in as Chancellor today to show that Germany is back in business.

The gesture is supposed to end one of the longest periods of government paralysis in modern Germany. Frau Merkel, who will be the first woman Chancellor, wants to change the tone of German foreign policy: she will become more conciliatory towards the Bush Administration and more cautious towards President Putin of Russia.

All the signs are that she wants to align Germany with “New Europe” — a continent more open to transatlantic influence and liberal economics. The question being asked by her hosts — Paris and Brussels tomorrow, London on Thursday and then Warsaw — is how she can deliver an active foreign policy with a sickly economy hamstrung by public borrowing and overregulation.

“We have to get our skates on,” an adviser to Frau Merkel said yesterday. “Germany needs to be heard again.” Few, if any, significant decisions have been made by the Government since Gerhard Schröder called elections last May.

The long campaign, a confused vote and two months of negotiation to form a clumsy “grand coalition” have virtually crippled government in the largest economy in Europe. The most important change in policy under Frau Merkel is expected to be improved links with the United States. She has already pleased Washington by telling the Chinese leadership that she opposes lifting the arms embargo against Beijing. She said: “I’m not going to be afraid to tell foreign guests what I think.”

“We have a foreign policy based on values,” Christoph Heusgen, Frau Merkel’s adviser, said. He has been on the staff of Javier Solana, the head of European foreign policy. New nods towards Washington are coming every day.

The diplomat originally tipped to be Ambassador to the US, Klaus Scharioth, was deemed by the Merkel team to be too critical of the Bush Administration and is now the favourite to go to London.

Frank-Walter Steinmeier, the new German Foreign Minister, used to be Herr Schrö- der’s chief of staff and helped to shape German opposition to the Iraq war. But he is a technocrat with an uncertain grasp of English, and the balance of foreign policymaking is expected to shift to Frau Merkel’s Chancellery. There is no prospect of Germany sending troops to Iraq.

Herr Schröder, 61, who declined to serve as Frau Merkel’s deputy in the coalition, told politicians yesterday that he would give up his parliamentary seat tomorrow.

COMMITMENTS

• Raise VAT to 19 per cent
• Raise the age of pension entitlement from 65 to 67
• A €25 billion investment programme (until 2009), partly financed by selling gold reserves
• Cut subsidies on coal and introduce tax breaks for housebuilders
• Give more power to the regions
• Ease the ability of companies to hire and fire