Supporters held the logo of “Prime Minister” and “Melz” in the last campaign of the German Christian Democratic League party in Munich on February 22, 2025.
Alexandra Beier | AFP | Getty Images
The Christian Social Union (CSU), a conservative alliance composed of the Christian Democratic Union (CDU) and its sister parties, will lead Germany again for months after Sunday’s federal election.
Center CDU-CSU won 28.6% of the vote, Germany’s far-right alternative (AFD) ranked second with 20.8%, while the Social Democrats (SPD) ranked third with 3rd. By vote Preliminary results of the federal return officer.
The results will be confirmed late Monday, meaning CDU-CSU candidate Friedrich Merz may be identified as Germany’s next prime minister, taking over from SPD’s Olaf Scholz After his tripartite alliance collapsed late last year.
“We won because CDU and CSU work well together, we are very prepared for this election and have done a good job in taking over the responsibility,” Mels said on Sunday. Prepare.”
Friedrich Merz, a union candidate for the Prime Minister and CDU federal president, joined the “Quadrell” TV round to participate in the Bundestag campaign.
Michael Kappeler | Picture Alliance | Getty Images
The victory of the Christian Union brought about a period of uncertainty in Europe’s largest economy, although there may now be weeks of political horses as a coalition government.
The most likely result is that CDU-CSU forms a bipartisan alliance with SPD, a tried and tested alliance formula in Germany, although a tripartite alliance composed of CDU-CSU, SPD and Greens is also a possibility. .
Melz has ruled out any ruling coalition with the anti-immigrant, populist AFD party, which had its best election results ever on Sunday.
CDU politician and European Parliament member David McAllister told CNBC on Monday that Melz “apparently has a task to form a new government.”
“He will be a very good Prime Minister because I have known him for many years and we can absolutely believe in this person and hope he can bring back his confidence and he can restore his confidence in Germany. This is his main task, I wish him Everything goes well.”
From “Debt Braking” to Trump
European market Although the German results responded somewhat to the election results Dax On Monday, the stock market index opened higher than 0.4%.
But despite this breath, the new German government still has a lot to fight.
Berlin’s political division is considered a bad attention investor, they warn Germany must overcome a series of challenges. These include the economic discomfort that has swept the country in recent years, its automotive and export-side economy looks fragile, and a tricky debate on immigration and integration that has made the AFD stand out and popularity rise. .
Germany’s wider role in European geopolitics is also a matter of debate, especially given the ongoing war in Ukraine and another potential headwind brought by U.S. President Donald Trump and his threat of trade tariffs.
Volkswagen ID.7 electric vehicle was seen on February 18, 2025 at the Volkswagen Electric Fleet Lead Factory in Emden, Germany.
Carmen Jaspersen | Reuters
Economists are considering what the CDU-CSU-led government means for Germany’s economic and fiscal reforms, and have been experiencing a long debate and split in the debate on Germany Debt Braking“A fiscal policy contained in the German constitution limits the debts the government can bear.
Deutsche Bank strategists noted that while the election results “may reduce the risk of particularly fragile alliance negotiations, it still confirms a persistent anti-establishment trend that can be seen in Germany and across Europe.”
“The result is the lowest voting share ever for the two major political parties, even if the turnout (82.5%) is the highest since at least 1990. CSU, SPD and Greens are in less than 66% of the seats, which means including defense spending in Any debt-braking reform within requires support from a marginal party,” they wrote in their notes.
Fiscal policy proved to be an ongoing political disaster for Berlin, with debates among the parties on the extent to which debt brakes ensure responsible spending or limiting growth and investment.
Both arguments may be meaningless The economy has been in recession for months.
“Less bad news”
“First, the smaller news is: Germany will get a new government once,” said Holger Schmieding, chief economist at Berenberg Bank, in a report on Monday. Agenda was reached, which would end the long-term debilitating of political uncertainty.”
“We expect a bipartisan coalition between CDU/CSU and Centre-Left SPD to implement some reforms that promote supply side, reduce regulatory and tax burdens on businesses, and pursue more rational immigration, and inefficient and expensive energy policies .” Schmid pointed out. However, he questioned that his populist parties (such as the AFD and the Left) could combine and prevent changes to the German constitution, such as relaxing debt brake rules.
Other economists point out that the left (Die Linke) said it is actually in favor of reforming debt brake rules and will not hinder such a move.
“While both the AFD and the Left seem to have the number of seats required to make up minorities for constitutional amendments and reforms, which requires a two-two majority in parliament, we note that the Left supports reforming debt-braking rules.
“Nevertheless, despite being at risk, we believe that the new coalition government is more likely to reform and moderately relax fiscal policy,” they noted in an emailed comment.
