Germany | Inconclusive election triggers long-lasting horse-trading
The federal election has seen a further fragmentation of the vote, which has left Germany with an inconclusive result. A protracted government formation is likely as the centre-right and centre-left blocks try to convince one party from the other side of the political spectrum to join an untested three-party coalition.
What you will learn:
- The SPD is the narrow winner of the election, but the CDU will also attempt to form a coalition. Both will need the Green party and the liberal FDP to form a majority government, making them the kingmakers. A three-way deal will be tricky to reach, and a renewed CDU-SPD coalition remains a fallback option.
- We continue to see only limited forecast implications either way. The strong showing of the Green party implies an accelerated green transformation, but the FDP’s support for the debt brake suggests that the impact on investment may be limited.
- We still see limited room for a significant loosening of the fiscal stance and no real appetite for a fundamental overhaul of the EU’s fiscal rules.
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