The impact of elections on the economy of the European giant
The Germans went to the polls in advance last Sunday, and responded categorically. In a difficult conjuncture, in which the main engine of the European economy has been in recession for two years and seems to be sent to the third and with a complex geopolitical context, 84% of voters exercised their voting rights. This number is the largest since German reunification in 1991 and is a sign that the Germanic political and democratic culture seems to be of good health.
No time to lose
The parties of the previous government-the SPD social democrats, the Greens and the FDP liberals-were penalized, with the latter not to get the 5% necessary to ensure representation in Buddestag, the German Parliament. CDU/CSU, a Centro-Right Coalition, Christian Democrat, emerged as a winner, but far from an absolute majority that allows it to govern alone in a stable way, needing external support. The new chancellor, Friedrich Merz, has long designed a red line compared to the second most voted party (20.8% of the votes), AFD, and is expected to try a government solution based on the central block, relying on the SPD-the party that registered the largest fall compared to the 2021 legislatures.
In a post-election scenario like this, it would not be difficult for a long and hard process of negotiations and government arrangements, but this does not seem to go through Merz plans. The newly elected chancellor intends to have a government formed «Until Easter» why «The world outside is not» waiting for Germany «It is not even waiting for long talks and coalition negotiations. We have to quickly return to action »he said.
And the urgency is perceived. How can the European Union be able to assert itself as a player Active of the international conjuncture if your main engine has not been operational for three years? But it seems that Merz's victory is already having some effect, at least in the markets. Campaign promises, focused on economic growth, have led German companies to close Monday at higher levels.
The reaction of markets
« The result obtained is very close to the best possible scenario from the macroeconomic point of view, » said Maximilian Kunkel, director of investment to Germany at UBS, quoted by Reuters. « This should bring to the EU a government-facing government, with a reform-oriented pro-process agenda and some necessary political stability. ». On Monday, DAX, the main German index, registered an appreciation of around 0.6%, while the French index CAC 40 devalued 0.78% and British FTSE 100 remained.
«I think what the market is seeing now is some stability»said Michael Field, stratega-chief of actions of the Morningstar, CNBC. “At least we know who won the elections, we know who claims them, and then we know who will be the base of the coalition from here. Therefore, I think the market is facing it as a huge positive factor »concluded. Regarding the belief in the ability of the new government to rebuild the German economy of chaos in which he dived, Field believes that «It doesn't take much to reverse this dynamic and slightly change the situation in the positive sense». «A new government with a mandate to really lower energy prices, trying to improve the competitiveness of the economy» It looks exciting and «Any little help could really give the sector the impulse that it needs so much at this stage»shot.
«For the markets»reads in website of the International XTB, «This is a result in line with expectations, so, in the short term, the reaction of markets is quite moderate. However, in the long run, the election can gain importance in terms of the situation of the German economy and Europe as a whole ».
In general, with Merz, Germany is expected to leave the negative spiral in which he embarked a few years ago and that Europe will benefit from the good condition of its most essential state.
