Stockholm (Ekonamik) – Watched closely in Berlin, Germany’s CDU and SPD met their continuing decline in state elections in Saxony and Brandenburg respectively with paradoxical but palpable relief, faring slightly better than some recent polling had indicated. The far-right Alternative für Deutschland (AfD) was prevented from becoming the largest party in both former DDR states, despite claiming victory by doubling its votes in Brandenburg and advancing in Saxony, according to preliminary numbers. The SPD experienced its worst election in any state since reunification.
Exit polls showed the CDU losing over six points to secure 33% in Saxony, while the AfD gained 18%. In Brandenburg, the SPD won 26.6%, losing five points, while the AfD secured 24.5%, a 10-point gain. More voters in the hundreds of thousands participated in this election.
The results follow a contentious election campaign in which the AfD appealed to widespread anger and frustration in parts of the former East Germany stemming from a perception of being ignored by Berlin since reunification and opposition to the refugees and migrants who arrived in Germany in 2015-16. The party has significantly less support in the Western part of Germany, and should not count on government influence from its new mandates, all other parties having ruled out the notion of government including the party.
The result means that neither of the two state governments retains its majority, opening the door to negotiations between three or more parties. The Green party also made progress in both states, while the far-left Die Linke declined. But beyond this, the relatively heavy losses (especially for the SPD) will be scrutinised in Berlin. An outright AfD victory in Saxony would have been a heavy blow to Chancellor Angela Merkel’s authority, whereas the regression for the SPD in Brandenburg will provide more scrutiny within that party of the CDU-SPD grand coalition, according to Nadia Gharbi, an analyst with Pictet Wealth Management.
Meanwhile, Germany’s Q2 contraction of 0.1% has raised the likelihood for further fiscal stimulus. “The fragile situation of the two mainstream parties renders decision-making more complicated,” Ms Gharbi writes in a flash note. According to public comments by Chancellor Merkel and Finance Minister Scholz, there are no indications yet that Berlin is ready to quickly abandon the Schwarze Null (“Black Zero”), or even ignore the constitutional debt brake and start to spend. Nevertheless, at least the debate among officials has started and a gradual approach might emerge in the autumn.”
The 2020 budget debate in September may provide further clues as to the pressures and official state of the economy, and Ms Merkel’s cabinet will also decide on a comprehensive package to enhance climate protection, she added. While Germany has not yet deteriorated to a point where further fiscal stimulus is required, the industrial slump is beginning to affect domestic demand, so employment will be a key measure to watch.
Another state election in Thuringia will follow on October 21. In addition, the SPD is set to elect a new leader at its party conference in early December, with finance minister Olaf Scholz as the most prominent candidate.
Video: (c) Euronews: Why are this weekend’s state elections in Germany so significant? (Youtube)
