by Patrick Fearon-Hernandez, CFA | PDF
Germany’s parliamentary elections in late September were momentous for several reasons. Perhaps most important, the elections set the stage for a new leader to take power as Chancellor Angela Merkel decided not to stand for another term after leading Germany since 2005. However, even though the retiring Merkel is likely to see her left-of-center rivals take control of the country, the coalition they’re forming may leave Germany’s key economic and financial policies relatively unchanged, with big implications not only for Germany itself but also for the broader European Union.
In this report, we parse Germany’s party structure and discuss how past coalitions have run their economic and financial policies. We next focus on how those economic and financial policies have played out in Germany and beyond during the 16 years of Merkel’s rule, and why the current coalition talks may leave many of those key policies in place. We conclude with a discussion of the investment ramifications if that turns out to be the case.