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Bundestag elections 2017

2017 is a mega election year for Europe. After the Netherlands and France, Germany went to the polls with federal elections on September 24. (Italy will not vote until spring 2018.) Chancellor Merkel (CDU) campaigned for her fourth term, her main contender being the former president of the European Parliament, Martin Schulz (SPD). While the CDU/CSU emerged from the elections as the strongest party, the process of forming a government – efforts focus on a coalition comprising the CDU/CSU, the FDP and the Greens – is dragging on in the light of, in some cases, controversial positions. Common ground has to be found on European policy, labour and social policy, as well as environmental and climate policy.

25 Documents
December 12, 2017
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Elections, referenda and politics have held quite a few surprises in the last 1 ½ years. While there is a general feeling among voters that things are moving in the wrong direction – although there are certainly differences of opinion about the direction itself – the outcomes of recent elections and polls have probably done very little to counter their disenchantment. One reason for this frustration is the increasing complexity of political issues. They just cannot be resolved using the simple answers offered by many populists. Voters crave such simple answers, however, as throughout evolution humans have been very successful in reducing complexity by applying heuristics, simple rules drawn from experience. [more]
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November 13, 2017
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Employment in Germany has been rising for years now. However, cyclical tailwinds increasingly hide structural problems, such as tighter regulation and demographic developments. If the labour market is not to become a major obstacle to German growth, the future government will need to take quick and decisive action to counteract existing and imminent imbalances on this key market. Reducing long-term unemployment will require a mix of policy measures. The total number of jobs would probably be significantly lower, if there was no low-wage sector. Integrating refugees and the “mismatch” between the qualifications desired by employers and the qualifications which unemployed people actually possess are major challenges. Which direction is the new German government going to take in labour market policy? [more]
2
November 3, 2017
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Envisaged Jamaica coalition: After the exploratory talks is before the negotiations. It would not come as a surprise, if the coalition formation were to take longer than ever before in the Federal Republic and if the chancellor were not until January. Given that in many areas critical details remained unresolved in the first round of the exploratory talks, further challenging rounds will follow in the next few weeks. Only after that will the official coalition talks begin - provided the Greens sound the all-clear at their party convention. The search for compromises is aggravated, as many of the partners’ requests have to remain unfulfilled despite buoyant tax revenues. Initially, i.e. in 2018, the economic impulse of a "black-yellow-green" fiscal policy is likely to be very limited. But steps in the right direction of strengthening Germany are on the horizon. Another positive is the clear commitment to a united and strong Europe. (Also included in this issue: November tax estimate, German current account surplus, trends in the EU industry) [more]
3
October 6, 2017
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The view from Berlin: Jamaica unlikely to trigger fundamental policy changes. The total additional fiscal impulse provided by a Jamaica coalition could in our view amount to between EUR 15 bn and EUR 20 bn in 2018. This would be only marginally more than the EUR 15 bn tax cuts "promised" by the outgoing Minister of Finance, which we had already taken into account in our 1.8% GDP forecast for 2018. Proposals in the FDP's election platform to scale back the ESM and to install an orderly EMU exit procedure have raised concerns among some EU politicians. We doubt that these two proposals will make it into the coalition treaty. Despite the FDP's insistence on more market- and rule-based procedure within EMU, it is very unlikely that Germany would not provide the necessary support if another EMU country slipped into acute crisis. (Also included in this issue: Public finances after the election, World trade) [more]
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September 19, 2017
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German Bundestag elections 2017: The winner seems to be clear, but not the next government! According to the ARD Deutschland-trend (14.09.) only a renewed Grand Coalition or a coalition between Merkel‘s CDU/CSU, the liberals (FDP) and the Greens (“Jamaica”) would be arithmetically possible. But given tight polls and their typical error margins other alternatives might become available. We are discussing coalition scenarios and their possible implications for Germany’s economic and EU policies as well as financial markets. [more]
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September 12, 2017
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German industrial policy has been cautious over the past few decades, especially in comparison with several other European countries. And this approach has been successful. The German government should continue to refrain from active industrial policy. Nevertheless, we believe that greater state engagement or a realignment of existing policy is vital in some areas. One area where we see a need for action is network infrastructure. When it comes to the shift in German energy policy, it would be sensible to focus more strongly on what is genuinely achievable. [more]
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September 6, 2017
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As the highlight of a so far uninspiring election campaign, Chancellor Merkel and her SPD contester Martin Schulz exchanged arguments in yesterday’s TV debate. Given the huge audience of 16.2 m, i.e. 26% of the electorate, Schulz understood the debate as an opportunity to challenge the Chancellor and to reverse the SPD’s downward trend in the polls. While the chancellor remained in her cautious rhetoric Martin Schulz tried to seize his chances by attacking Merkel’s policy course above all on migration and foreign policy as well as equality – issues voters consider most important in surveys. [more]
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September 4, 2017
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Optimism about Europe’s future surged after the French elections, while the EU is increasingly losing patience with British “divorce tactics”. Franco-German initiatives will be key to set the path for European reforms but the debate is expected to only gain speed after the formation of a new German government towards the end of the year. Meanwhile, the refugee challenge and EU external relations will remain on top of Europe’s political agenda. [more]
9
August 31, 2017
Region:
During the past four years, prices for owner-occupied homes have risen by c. 30% and rents by 15% across Germany. So far, the government’s housing policy has hampered rather than promoted residential construction. A few weeks ahead of the German parliamentary elections we take a look at the housing policies spelled out in the election programmes of the six largest parties. There are several ideas to make it easier for people, in particular families with children, to buy homes. However, additional policy-induced stimulus for demand might push prices upwards, particularly since supply is relatively inelastic. In that case, any electoral gifts would not benefit the families, but only the property sellers. [more]
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