German election: Close contest dominated by myopic debate – Deutsche Bank

Research Team at Deutsche Bank suggests that the campaign for the German federal election on September 24 has PP new heyday as the party was able to nearly completely reduce the then huge backlog in the popularity ratings, i.e. from about 15pps to about 2pps at present.

Key Quotes

“In the political debates the major parties primarily build upon their traditional issues, i.e. the CDU/CSU will focus on internal security, a sustainable fiscal policy and tax relief for the middle class and families PP for higher wages, corrections of the Hartz reforms and extended worker rights.”

“Thus the parties could fail to address the looming problems of the German economy, namely reform backlogs especially on the labour market and in the education system. At present only the FDP and parts of the CDU/CSU seem to take care about these issues.”

“The importance of EU issues will depend on the number of refugees and the result of the French election, e.g. pro-European attitude their commitment to the euro area and the EU will remain strong but conditionality will still play an important role. Largescale stimulus or a decisive call for a substantive institutional build-out (risk-sharing via fiscal union or deposit insurance scheme) remains unlikely as the public seems to be unlikely to accept a more open transfer union.”

“While polls still point to a renewed grand coalition lead by Chancellor Merkel as the most likely election outcome, other options including a redred green coalition have become more likely.”