The German election taking place on Sunday is not expected to have a significant impact on the economy. But the composition of the next coalition – which is likely to be either another grand coalition between the CDU and the SPD, or a tie-up between the CDU, the liberal FDP and possibly the Greens too – could have a significant bearing on the German and euro-zone economies.
For the German economy, a CDU/FDP government would probably be best for trade, business and maybe also consumer spending. But the SPD’s pro-European stance suggests that a grand coalition would have the best chance of promoting the deeper integration that we think is needed for the euro-zone to prosper in the long term.
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