BERLIN (Reuters) – German economists and industry groups expressed relief on Monday that Europe’s biggest economy probably avoided a leftist government after the Social Democrats narrowly won the election but the far left’s weak result ruled it out as a potential partner.
The most likely alliance to succeed Angela Merkel (after 16 years of being chancellor) is a centrist trio. Merkel’s conservative Social Democrats (SPD), and Merkel’s Social Democrats (SPD), both say that they would like to be the government leaders. Both have also identified the Greens (FDP), and the pro-business Free Democrats(SPD) as their preferred partners.
A so-called red-red/green coalition, which included the SPD and Greens was considered one possible configuration but is no longer feasible due to the poor performance of the far-left Linke party.
Joerg Krämer, Commerzbank’s chief economist (DE): “Many companies and investors should feel relieved that the red-green/red alliance won’t have a majority at the new lower house.”
According to Kraemer, the Free Democrats were able to strengthen their position, since no coalition can be formed without the SPD or conservative bloc. This is something both groups are keenly avoiding.
Kraemer stated that an economic turn to the left was not possible. However, he said that it was unlikely to implement a market-friendly program of reforms due to Greens involvement in government. These Greens are not compatible with FDP on many aspects.
Economists and analysts also called for quick conclusion to the coalition talks.
Bayern LB analysts stated, “The exclusion from a left wing alliance should result in relief for the markets. However, the prospect of protracted exploratory or coalition talks will also create uncertainty for the coming weeks.”
The BDI trade association urged the parties not to engage in tactical maneuvering but to instead focus on Germany’s economic policies.
Siegfried Russwurm of the BDI stated that “the strengthening of our economic force and the commitment towards Germany as a nation of industry, exporteds and innovation is essential for any conceivable alliance.”
The Greens, an environmentalist group that is expected to form a coalition with the government, are requesting help from energy groups in preparing for the coming green revolution.
The parties need to demonstrate in coalition negotiations that the party is serious about the energy transformation. Christian Bruch of Siemens Energy chief executive stated, “This includes being more honest in the discussion: Transformation will be painful and, at minimum initially, it will also result in jobs.”
According to the HDE retail association, the sector needs stability following the turmoil caused by the coronavirus epidemic.
Josef Sanktjohanser, President of HDE said that companies require stable and reliable conditions during times like the pandemic.
This meant strengthening the town centre and decreasing firms’ burden. He stated that retail companies require more oxygen, and tax increases or bureaucracy should be avoided.
(This story refiles to remove redundant words from headline)
Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. You should be aware of all the potential risks and expenses associated with trading in the financial market. It is among the most dangerous investment types.