Germany: Shift in the electoral landscape – Rabobank

Sandeep Kanihama FXStreet Contributor

Analysts at Rabobank suggest that while Merkel was the unsurprising winner of yesterday’s elections, the outcome did suggest a shift in the German electoral landscape as the populist far-right AfD came in third.

Key Quotes

“The process of finding a workable coalition starts now, but we may not see a new government before Christmas.”

“There are two feasible coalitions: a renewal of the Grand Coalition with the SPD (386 out of 709 seats, preliminary) and the “Jamaica”-coalition with the FDP and the Greens (378 seats in total). SPD leader Schulz currently rules out any role in government for the Social Democrats on the back of the party’s weak results, so “Jamaica” now seems the most likely option.”

“It would be the first time that a coalition of three parties governs Germany and they are ideologically very far apart. They can find consensus relatively easily on domestic- and fiscal policies, but on European issues it will be much harder.”

“The market impact is muted. The negotiations will be difficult, but political risk-related volatility is currently hardly priced in.”

Author

Sandeep Kanihama

FXStreet Contributor

Sandeep Kanihama is an FX Editor and Analyst with FXstreet having principally focus area on Asia and European markets with commodity, currency and equities coverage. He is stationed in the Indian capital city of Delhi.

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