German Chancellor Olaf Schulz (right), Finance Minister Christian Lindner (left) and Minister for Economic Affairs and Climate Action Robert Habeck address the media.
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Political commentators say Berlin’s governing coalition could be in trouble ahead of next year’s national election after the far-right AfD won a historic state election at the weekend.
The populist and anti-immigration Alternative for Germany (AfD) triumphed in two state elections on Sunday, winning far more votes than parties in the current national governing coalition behind Chancellor Olaf Scholz.
Marcel Fratzscher, director of the German Economic Institute, told CNBC’s “European Signpost” on Monday that the result means that Scholz’s coalition will face challenges between now and the next election in 2025 .
“It will be difficult for the national government to implement any major reforms to move forward,” he said.
Economists at Deutsche Bank echoed similar sentiments in a report published on Monday, noting that the outcome could put “further pressure” on an already fragile alliance. “A weak election result could accelerate a shift in campaign patterns for next year’s federal election, narrowing the scope for meaningful reform by then,” they said.
result
Preliminary results for Germany’s eastern states Thuringia and saxony It shows that the far-right Alternative for Africa party received more than 30% of the vote in both states, and even became the largest party in Thuringia with 32.8% of the vote.
The results will confirm that the far-right AfD has gained votes since the last state elections in 2019, when the party won around 28% in Saxony and 23% in Thuringia. The Alternative for Germany’s victory in Thuringia was the party’s first state election victory and marked the first time since World War II that the far right had won a state election.
Despite its success, the Alternative for Germany is unlikely to become part of the governing coalition in Saxony and Thuringia, as most other (but not all) parties have said they do not want to cooperate with the far right.
The election results come as Germany, Europe’s largest economy, is in trouble. Data released by the National Bureau of Statistics last week are you ready This reflects a quarter-on-quarter decrease of 0.1% in Germany’s gross domestic product in the second quarter of 2024. published figures Monday also showed that Germany’s manufacturing PMI fell further into contraction territory in August to 42.4, a multi-month low.
The center-left Social Democrats led by Scholz received only 7.3% of the vote in Saxony and 6.1% in Thuringia. The situation of other national government coalition partners, the Green Party and the Free Democrats, was even worse.
Suhl, Thuringia, August 13, 2024: Björn Höcke, leader of the state parliamentary group and party and the party’s top candidate, on the market square “Der Osten macht’s” slogan before delivering a speech.
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Another anti-establishment party, BSW (Sahra Wagenknecht Alliance), a left-wing nationalist party founded in early 2024, also achieved success on Sunday – receiving 11.8% of the vote in Saxony and 15.8% in Thuringia.
“Amid conflicts over immigration and major challenges posed by Russia’s invasion of Ukraine, voters expressed their disapproval of the increasingly infighting Berlin coalition,” Carsten Nickel, deputy director of research at Teneo, said in a report Monday. anger.
electoral prospects
Fratzscher added that federal policymaking could still be difficult even after the next national election. He explained that Germany’s political climate is characterized by a “strong atmosphere” of conflict and frustration, including rising anti-immigration sentiment.
Fratzscher added that it was “difficult to imagine” how a government could be formed, including at the federal level.
“This means that there is indeed a political deadlock. This is a big problem for an economy that needs reform, that needs deregulation, that needs a big push for investment, that needs more participation in Europe,” he added.
The state election results will be announced before Germany’s 2025 national election, which is likely to be held in September. That plan is unlikely to change, with experts saying there is little chance that new state election results will lead to swift voting across the country.
“In our view, the results are not shocking enough to end Berlin’s government coalition prematurely,” Deutsche Bank said.
Germany also rarely holds early elections because of constitutional obstacles that make them tricky.
Attention will turn to two more state elections scheduled before the national vote, including one later this month in the eastern state of Brandenburg. Scholz’s Social Democrats are currently part of the state’s governing coalition and hope to retain the state’s vote share.
Tenio’s Nickl told CNBC’s “Squawk Box Europe” on Monday that looking ahead to the national election, Scholz and the Social Democrats now want a quiet time before focusing on their campaign strategy.
“For the Social Democrats and Olaf Scholz, hopefully things will calm down next year,” he said.
“I think the idea is to wait a year and then really focus on the story and look at the last three years, I mean, Germany has been in the midst of huge geopolitical changes and we haven’t reached the point where you Are you willing to basically swap governments, or are you going to give us a benefit?
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