Merkel set for fourth term as German Chancellor

Merkel set for fourth term as German Chancellor

21-09-2017 | インサイト

Germans go to the polls on Sunday in what is likely to continue Angela Merkel’s reign as head of Europe’s largest economy.

  • Léon  Cornelissen
    Léon
    Cornelissen
    Chief Economist

Speed read

  • Center-right CDU/CSU set to keep coalition with center-left SPD
  • Strong showing by euroskeptic FDP could unsettle markets
  • Far-right may sit in parliament for first time since WW2

Her reinstatement as Chancellor for a fourth term would be broadly welcomed by markets as continuing Germany’s steady-as-she-goes path, especially if the current coalition carries on. Merkel’s center-right Christian Democratic Union/Christian Social Union (CDU/CSU) remains ahead in the polls with a double-digit lead over their main rival – and current governing coalition partner – the Social Democratic Party (SPD).

However, the rise of the anti-euro Alternative for Germany (AfD) means Germany is on course to see a far-right party in the national parliament for the first time since World War Two. Minority parties must get over 5% of the vote to win seats, and the anti-immigration AfD is already polling above 10% of the total predicted vote. The main parties have already ruled out a coalition with it.

Meanwhile, the ‘dark horse’ may prove to be the liberal but somewhat euroskeptic Free Democrats (FDP). The party currently has no seats in the 598-seat Bundestag but has over 10% support in the polls, which means it may hold the keys to power. Other parties contesting the election are the Greens, who currently have 63 seats, and the far-left group Die Linke, who have 64.

Two viable coalitions

“The polls have been pretty consistent in predicting a CDU/CSU victory, which means Merkel will get her fourth and probably final term,” says Robeco Chief Economist Léon Cornelissen. “It now seems that there are only two viable coalitions with an overall majority – one between the CDU/CSU and SPD as before, or the ‘Jamaica coalition’ of the CDU/CSU along with the FDP and the Greens should the SPD emerge as too weak.”

The coalition got its name because the colors of all three parties taken together resemble the Jamaican flag. “However, this isn’t all that likely because of the large differences between the policies of the FDP and the Greens,” Cornelissen says. Such a coalition has never been tried at a central level, but can’t be ruled out.”

“The real worry is the AfD, as it would be the first time since the war that we’ve had the far-right at a federal level in parliament in Germany. Merkel covers the center in German politics, but now she’s facing a strengthening far-right. The CSU has always said it would ‘never accept a party to the right of us’, but that looks like changing. There has never been a successful euroskeptic party in Germany, but there are limits to how far the far right can go.”

Potential coalitions. Source: Financial Times/wahlrecht.de

Focus on France

Cornelissen says all eyes will be on how many seats the FDP ends up getting, and its resulting effect on future relations with French President Emmanuel Macron. The party is opposed to Macron’s ambitions to replace the International Monetary Fund with a European equivalent, along with his plans for a Eurozone budget. The party also supports Greece leaving the EU and the closure of the European Stability Mechanism which has helped with bailouts.

“The FDP is a natural coalition party for the CDU as they have successfully worked together in the past, and they also believe in lower taxes,” Cornelissen says. “Such a deal would be considered very business friendly and a boon for the stock market. But the FDP has a broader agenda that is more euroskeptic, which would make a future deal with Macron difficult.”

“It’s a kind of barometer for the strength of populism in Germany. A particularly strong showing for the FDP would unsettle markets for a while, as it would also force Merkel to be not that generous with France. However, the real euroskeptic party is the AfD, as they want a referendum on leaving the EU and the reintroduction of the Deutsche Mark. They’re the real threat.”

SPD on the backfoot

Such euroskeptic worries means the status quo may prevail, though the SPD has been losing votes following a poor election campaign by its leader Martin Schulz, Cornelissen says. “Schulz has promised to go to party members to get an agreement to continue the current grand coalition, and this could be particularly difficult because its support has been collapsing in the polls.”

“We could therefore even end up with a CDU/CSU minority government, though they would still need the support of the SPD in the upper house, and would have to deal with them in some way anyway.”

So what about the likely future of the Germany economy, still the largest and strongest in Europe? “In economic terms you can expect extra money for infrastructure and a lowering of taxes for households, which would be good for growth,” says Cornelissen.

“The German economy may experience some difficulties next year because of the strength of the euro hurting exports, and Germany is vulnerable to economic weakness in China, where the risks are on the rise because of China’s unsustainable rise in debt. All in all, we believe that growth in Germany will be in line with this year’s expectation.”

最新の「インサイト」を読む
最新の「インサイト」を読む
配信登録

重要事項

当資料は情報提供を目的として、Robeco Institutional Asset Management B.V.が作成した英文資料、もしくはその英文資料をロベコ・ジャパン株式会社が翻訳したものです。資料中の個別の金融商品の売買の勧誘や推奨等を目的とするものではありません。記載された情報は十分信頼できるものであると考えておりますが、その正確性、完全性を保証するものではありません。意見や見通しはあくまで作成日における弊社の判断に基づくものであり、今後予告なしに変更されることがあります。運用状況、市場動向、意見等は、過去の一時点あるいは過去の一定期間についてのものであり、過去の実績は将来の運用成果を保証または示唆するものではありません。また、記載された投資方針・戦略等は全ての投資家の皆様に適合するとは限りません。当資料は法律、税務、会計面での助言の提供を意図するものではありません。

ご契約に際しては、必要に応じ専門家にご相談の上、最終的なご判断はお客様ご自身でなさるようお願い致します。

運用を行う資産の評価額は、組入有価証券等の価格、金融市場の相場や金利等の変動、及び組入有価証券の発行体の財務状況による信用力等の影響を受けて変動します。また、外貨建資産に投資する場合は為替変動の影響も受けます。運用によって生じた損益は、全て投資家の皆様に帰属します。したがって投資元本や一定の運用成果が保証されているものではなく、投資元本を上回る損失を被ることがあります。弊社が行う金融商品取引業に係る手数料または報酬は、締結される契約の種類や契約資産額により異なるため、当資料において記載せず別途ご提示させて頂く場合があります。具体的な手数料または報酬の金額・計算方法につきましては弊社担当者へお問合せください。

当資料及び記載されている情報、商品に関する権利は弊社に帰属します。したがって、弊社の書面による同意なくしてその全部もしくは一部を複製またはその他の方法で配布することはご遠慮ください。

商号等: ロベコ・ジャパン株式会社  金融商品取引業者 関東財務局長(金商)第2780号

加入協会: 一般社団法人 日本投資顧問業協会