Germany: Sunday's regional elections could lead to new troubles for federal government - ING

Eren Sengezer FXStreet

"Some 3.3 million citizens in Saxony and about 2 million citizens in Brandenburg are eligible to vote in the two state elections on Sunday," notes ING Germany's chief economist Carsten Brzeski.

Key quotes

"While this is only some 8 percent of the total German electorate, the two elections have the potential to create new troubles and tensions for the federal government. The elections could also be a painful reminder that almost exactly 30 years after the fall of the Berlin Wall, the country is again divided, at least when it comes to political preferences."

"Politically, both Brandenburg and Saxony are important for the parties of the federal government, CDU and SPD. While Brandenburg has been governed by the SPD since reunification, Saxony has always had a minister-president from the CDU. This year, however, these almost natural roles as governing parties have come under severe pressure, due to the rise of the AfD. However, the results from the European elections in May suggest that the AfD could gain further votes and that both CDU and SPD could lose support."

"According to recent polls, the AfD is in a neck-to-neck race with the CDU to become the biggest party in Saxony, with both parties currently at some 25%. In Brandenburg, SPD, CDU, AfD, Greens and the Left Party are all trading at around 18% of the votes. Even though the share of foreign-born residents is low in both states, the AfD receives support as an anti-immigration party. Also, and probably even more important, the electorate support for the AfD seems to be the result of a broader feeling of being left behind, both economically and socially. To some extent, the rise of the AfD in the Eastern states of Germany can be regarded as a protest against national politics."

Author

Eren Sengezer

FXStreet

As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.

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