House View by the Chief Investment Office
German Elections A new impulse for Europe?
21 September 2017 | Tags: Germany, Politics, Europe
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Topic of the week: Recap
In the past four weeks, we have been attuned to the internet in Germany. Every tweet, hashtag, public comment and blog was carefully examined to gauge what people in Germany think as they head to the polls.
Every week, together with the EPFL Social media lab, we explore what's on people's minds in Germany by making use of artificial intelligence techniques to analyze opinions in real-time. Our Chief Investment Officer for Germany, Max Kunkel, discusses these key election topics and what they mean for investors.
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German Election Watch
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Opinion polls point firmly to Angela Merkel retaining the chancellery following Sunday's election. As the SPD continues to lack traction shortly before the election, we have raised our probability of Merkel retaining the chancellery from 85% to 90%.
Although a grand coalition remains our base case (CIO estimate: 60%), uncertainty is much higher when it comes to the CDU/ CSU's future coalition partner.
In this note we have drawn up a set of questions and answers based around the different coalition scenarios and implications these political unions may have.
Recent opinion polls suggest an 85% chance for Merkel to retain the chancellery.
Multiple coalition scenarios imply different economic consequences for Germany as well as partly opposing consequences for European integration, which is expected to accelerate in the coming years.
That said, potential coalition partners may seek the finance minister's post, which could affect the stance on the Eurozone periphery as well as the choice of the ECB president in 2019.
The latest polling still suggests a 75% probability of Merkel retaining the chancellery. But the odds of a grand coalition are markedly lower (60%) given several coalition options.
The polls suggest a marked shift to the right of the political spectrum by voters since the last election, with the FDP arguing for a Greek exit from the euro.
So the German election outcome will likely have an impact on Greece's planned bailout exit next summer.
Recent opinion polls suggest increased uncertainty in the aftermath of the 24 September elections, as the CDU/CSU (expected to capture most votes) may be able to form a coalition with either the FDP or Greens given their rise in recent months.
Multiple coalition scenarios imply different economic consequences for Germany as well as partly opposing consequences for European integration.
What is more, potential coalition partners may seek the finance minister's post, which could affect the stance on the Eurozone periphery as well as the choice of the ECB president in 2019.