After the 23 February German federal elections, all eyes turned to the coalition scenarios and the program of the next chancellor. With the Christian Democrats (CDU/CSU) emerging as the leading party, it is almost certain that CDU leader Friedrich Merz will become the next chancellor and form the government.
At this point, since the CDU has not been able to secure a majority, the question of who will knock on the door for a coalition is on the agenda. Merz and his party, which closed the door to the second-ranked Alternative for Germany (AfD), are likely to mobilize for a “grand coalition” with the SPD.
Looking at the numbers, the fact that the FDP, the junior partner of the previous traffic-light coalition, and the new left-wing party, the Sahra Wagenknecht Alliance (BSW), failed to pass the threshold and are now out of parliament seems to favor the CDU-SPD coalition. With these two parties out of parliament, the possible grand coalition automatically has a majority of seats.
On the other hand, if the BSW, which seems to have fallen short of the threshold by around 2,000 votes, manages to enter parliament after objections, the CDU-SPD coalition will need a third party. The biggest third-party candidate for such a coalition seems to be the Greens.
The SPD’s worst result since the Second World War also weakens the party’s hand in a possible coalition. Although Chancellor Olaf Scholz continues to serve as a caretaker, it seems less likely that he will remain at the head of the party. The most likely candidate to lead the SPD is Defense Minister Boris Pistorius.
Pistorius’ personal popularity, supported by the media, seems to even surpass Merz: Public broadcaster ARD asked voters which candidate they would most like to see become chancellor. Among those nominated by the parties, Friedrich Merz came first with 34%, but the person with the strongest voter support (though not one of the main candidates) was Boris Pistorius with 47%.
Party co-chairman Lars Klingbeil will head the SPD’s parliamentary group. So far, Klingbeil has been tight-lipped about whether the party would accept an alliance with the CDU.
In any case, there are other, bigger problems beyond the numbers. Some disputes between the CDU and the SPD, and between the CDU and the Greens, could come to the fore in a possible coalition. These include the war in Ukraine, transatlantic relations, the issue of migration and defense spending, and the debate on the constitutional debt brake.
On the issue of migration, for example, the CDU and its leader Merz have shown that they will not hesitate to side with the AfD. According to the exit polls of public broadcaster ZDF, voters made it clear that their biggest concerns were immigration and security (44%), followed by the state of the economy (35%).
The debate on defense spending and the constitutional debt brake could be Merz’s soft underbelly, since the CDU, which is also fiscally “conservative,” has long opposed any change or relaxation of the debt brake clause, which limits state debt to 0.35% of GDP. Merz had signaled before the elections that this position could be relaxed.
The two parties that will play a critical role in the new parliament, Die Linke (Left Party) and AfD, will also be decisive. The Left Party is in favor of lifting the debt brake but also wants to reduce the defense budget and opposes Merz’s platform on many other issues, including taxation and immigration. This could make any deal involving this party extremely difficult.
The AfD, on the other hand, wants to stick to the country’s strict debt limits but is in favor of increasing defense spending. And given the party’s warm relations with the new US government across the Atlantic, it is unlikely that Alice Weidel and her colleagues will oppose Trump’s demand for more European defense spending.
The failure of the “mainstream” parties to secure a two-thirds majority in parliament will also make it more difficult to pass the debt-ceiling reform. According to Bloomberg , this could lead to “some creative alternatives.”
The new chancellor could ask parliament to temporarily suspend the constitutional rule and allow higher spending. The most important risk to watch in such a scenario would be any litigation at the country’s Federal Constitutional Court. While it is difficult to predict how the court will react, it may be more inclined to an immediate suspension, especially given the current geopolitical challenges.
In addition, Markus Söder, leader of the CSU, the CDU’s sister party in Bavaria, had declared before the elections that he was also cold to an alliance with the SPD. One can imagine what the CSU, which does not even accept the SPD, would say about a federal coalition with the Greens.
However, the Greens seem to have left the door open for a coalition. When asked whether the Greens would contact the CDU for a possible coalition, Vice Chancellor Robert Habeck said that it was Merz’s prerogative to initiate such talks, but he also made it clear that the Greens were willing to participate in a coalition.
“This is the only possibility,” Habeck told public broadcaster ZDF. “What this result means has to be understood: We are in a very difficult situation,” Habeck said.
German business executives have already begun to assess the election results in terms of “stability” and “competitiveness.” Christian Bruch, CEO of Siemens Energy, said in an emailed statement: “It is important that the democratic center parties form a stable government as soon as possible to address these challenges as soon as possible. Germany must quickly regain its competitiveness. Steps in energy policy are vital for this,” he said.
Bruch’s comments are in line with a statement made last night by Deutsche Bank CEO Christian Sewing, speaking in his capacity as head of Germany’s banking lobby. “Germany now needs a government that is willing to act and can do so quickly. The challenges facing our country are enormous: the economy urgently needs a fresh start with fundamental reforms,” Sewing said.