Germany: A somewhat more pro-Europe stance is likely - BBH
|"Some of the euro's gains before the weekend were attributed to news that the CDU/CSU and the SPD reached an agreement, but the agreement was not to form a new government, as several reports suggested, but an agreement to begin formal talks," BBH economists explain.
Key quotes
Even if this agreement increases the likelihood of a new Grand Coalition, it is not a done deal. The SPD holds a party congress on January 25 and will vote whether to proceed with negotiations. If negotiations for begin, the members will vote by mail on the final agreement.
The preliminary agreement gives a sense of the direction of a new government. Both the CDU/CSU and SPD were punished by voters with the weakest support in modern times. A somewhat more pro-Europe stance is likely but falls well shy of SPD leader Schulz vision of a United States of Europe. There is also the suggestion that there could be a modest middle-class tax cut, and a plan to end the solidarity levy introduced for reunification.
One of the arguments against a Grand Coalition is that populist AfD would be the main opposition party. In Germany' s parliamentary system, the main opposition party is credited with certain privileges and committee representation, which may give it a larger platform.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.