German Finance Minister and Chancellor of the Social Democratic Party (SPD), Olaf Scholz, is attending a meeting with members of the Association of Foreign Journalists in Berlin, Germany, on June 9, 2021.
Emmanuele Contini | NurPhoto | Getty Images
LONDON – The upcoming elections in Germany have become even more unpredictable.
Voters go to the polls on September 26 and the latest poll, conducted by Forsa, shows support for the Social Democratic party, SPD, which rose to 23% of the vote. Meanwhile, Chancellor Angela Merkel’s conservative alliance with the CDU / CSU fell to 22%. It is the first time in 15 years that the SPD has surpassed the CDU / CSU alliance at the polls.
The SPD has been the junior coalition party of the general government led by Merkel, which is retiring from politics after 16 years in power. The SPD has been in coalition with the Conservatives in the past, a notion that was usually considered negative among its supporters for not being able to push through its agenda. Still, it now seems to be on the way to change.
The German Social Democrats, led by Chancellor-elect Olaf Scholz, have seen the party’s popularity improve as a result of the country’s worst natural disaster in decades. Torrential rains last month left nearly 200 dead and hundreds injured, as disastrous floods devastated properties and plantations.
Another survey, conducted by INSA, had shown on Sunday the SPD neck and neck with the CDU / CSU.
The last time the SPD was the leading party in the German coalition government was in 1998, when they joined the Green Party.
“Some CDU / CSU leaders have reacted harshly to Scholz’s alleged agenda of large spending and tax hikes,” Carsten Nickel, deputy director of research at consulting firm Teneo, said on Wednesday.
“The substance of these claims is questionable, but they suggest that Laschet’s already nervous alliance is taking the threat very seriously,” Nickel said.
Armin Laschet is the main Conservative candidate hoping to replace Merkel in the chancellery.
Laschet’s popularity has been questioned on several occasions, even when the CDU / CSU chose his main candidate for the next election. Some members of the CDU then criticized the general decision to hold the vote with Laschet instead of Markus Soder, prime minister of the Bavarian region.
German media reported on Wednesday that 70% of CDU / CSU supporters want to replace Laschet with Soder.
What the markets need to know
“Investors should keep in mind that, first, Scholz is a moderate frank, if not conservative, within the center-left SPD. The SPD is more willing than CDU / CSU to invest in areas such as green transformation, digitization, but also “Health and housing. However, a key exit from the solid public finance agenda is not in the letters with Scholz,” Nickel said.
The latter is one of the main themes of this election. Germany has taken a conservative approach to public finances, mainly since the 2009 legislation that governments must avoid a structural deficit. However, this changed slightly with the coronavirus pandemic, as more money had to be channeled to support businesses and citizens in the country.
In the future, one of the big debates will be whether Germany wants to be more flexible towards public spending both on its borders and in the EU.