Just a week to go until the last of the year’s big elections: Germans vote on Sunday, with Christian Democrat chancellor Angela Merkel an unbackable favorite to be returned.

Observers are entitled to a little scepticism here, since in 2005 Merkel’s party managed to blow a 20% lead in the opinion polls in a month or two before the election. But there is no sign of such a swing this time, and the Social Democrats are not showing the same powers of recovery that they did under former leader Gerhard Schroeder, who staged remarkable comebacks in 2002 and 2005.

In 2005, a majority of Germans actually voted for a left-wing government, with the SDP, the Greens and the Left party scoring 51% of the vote between them. But the SDP refused to deal with the Left (whose antecedents include the old East German communists) and could not put together a majority without them, so the result was a grand coalition under Merkel between the CDU and the SDP, leaving out the smaller parties.

This time, as the governing partners battle for supremacy, the advantage of incumbency plus the the lacklustre Social Democrat performance puts the Christian Democrats within reach of the goal that eluded them in 2005: being able to dispense with the grand coalition and govern with just the support of the Free Democrats, Germany’s liberal party.

The Free Democrats have been polling strongly, and attracting corresponding media attention — such as this report by Paola Totaro in this morning’s Age, which describes them as running “a textbook conservative campaign”.

Australians are used to a conservative party that describes itself as “liberal”, so this is a tempting but misleading description. The Free Democrats are a genuine liberal party, who have traditionally held the centre ground in German politics, balancing between the CDU and SDP (a place they must to some extent now share with the Greens). But although they remain socially liberal — epitomised by their openly gay leader — the emphasis in recent years has been more strongly on the free market and pro-business side of their platform, cementing the alliance with the Christian Democrats.

Nor is Germany alone in this respect: in Britain also, the Conservatives and Liberal Democrats are feeling their way towards greater co-operation. Lib Dem leader Nick Clegg is a stronger free marketeer than most of his predecessors, and although he is sceptical of the progressive credentials of David Cameron’s Tories, the two parties are clearly moving in the same general direction.

Liberalism is a broad church, and each party has to find its own niche. But as financial instability replaces terrorism and civil liberties at the forefront of public attention, there seems to be a tendency for liberals to distance themselves from the parties of the traditional left. Sunday will tell us whether German voters approve of the trend.