The political landscape in Germany witnessed a significant shift as the conservative alliance of the Christian Democratic Union (CDU) and its sister party, the Christian Social Union (CSU), secured a victory in the recent elections. Garnering 28.6% of votes, the CDU-CSU alliance emerged triumphant in Sunday's ballot, positioning Friedrich Merz as the likely successor to the chancellorship. Meanwhile, the far-right Alternative for Germany (AfD) secured second place with 20.8% of the vote, followed by the center-left Social Democratic Party (SPD) with 16.4%, marking its worst performance ever.
The CDU-CSU's victory sets the stage for forming a new government, though challenges loom large. The alliance's potential coalition with the center-left SPD appears most plausible, despite the SPD suffering a bitter defeat under Olaf Scholz, whose previous coalition collapsed last year. Alternatively, the Greens remain a potential partner. The election results underscore a turning point in German politics, as citizens express fatigue over policies perceived as lacking common sense, especially concerning energy and immigration.
Former U.S. President Donald Trump weighed in on the election outcome, noting its significance for Germany's conservative party.
"Looks like the conservative party in Germany has won the very big and highly anticipated election. much like the USA, the people of Germany got tired of the no common sense agenda, especially on energy and immigration, that has prevailed for so many years," – Donald Trump, U.S. President
Forming a new government won't be straightforward. The CDU-CSU alliance faces hurdles such as increasing domestic spending and revising the "debt brake" rule to stimulate Germany's flagging economy. This economic restructuring is essential, according to industry leaders.
"From our perspective, it's really time to act, and after yesterday's election, we wish that the new German government will form together quickly and then enter into decisive, immediate action and also a long, clear, long-term vision and a roadmap to really bring Europe's economy back on track." – Arnd Franz, CEO of auto parts maker Mahle
Arnd Franz highlighted critical areas needing urgent attention within Germany’s manufacturing sector.
"I think Germany's manufacturing sector requires some urgent action in terms of taxes, in terms of energy costs, and also in terms of flexibility of the labor market. There's three big, big things that are important for everyone in the manufacturing sector. For the automotive industry, of course, regulation is a top issue." – Arnd Franz, CEO of auto parts maker Mahle
Economic experts stress the need for immediate reforms to address Germany’s current economic challenges. Joe Kaeser, Chairman of Siemens Energy, acknowledged the restructuring required.
"It is a restructuring case, we need to be honest about this one," – Joe Kaeser, Siemens Energy Chairman
Kaeser advocated for a comprehensive agenda focusing on several key areas.
"2030 agenda" should have five key areas, focusing on the economy, infrastructure and energy, education and innovation, restructuring the pension system and, lastly, "regaining government control and government reforms." – Joe Kaeser, Siemens Energy Chairman
Alicia Garcia Herrero from think-tank Bruegel pointed out the broader European implications of Germany's political shift.
"They [European leaders] are realizing that they need to get closer together. And that is the silver lining that could make Europe stronger, that could make Germany stronger, that could force Germany, for once, to really think of a EU level military proposal, which would, however, mean that Germany would need to leave the debt break." – Alicia Garcia Herrero, economist at think-tank Bruegel
Herrero emphasized Merz’s potential to influence Europe’s economic direction.
"I think Europe is waking up, and Merz is the best example of this," – Alicia Garcia Herrero, economist at think-tank Bruegel
Forming a coalition remains complex and challenging. Carsten Brzeski from ING Research noted the intricacies involved.
"It's going to be complicated" to form a new coalition, – Carsten Brzeski, global head of Macro, ING Research
Olaf Scholz candidly addressed his party’s electoral defeat.
"It is a bitter election result for the Social Democratic Party. It is also an election defeat, [and] I think that needs to be said once clearly, from the start, given a result like this," – Olaf Scholz, Defeated SPD leader
"This time the election result is bad and therefore I also have responsibility for this election result," – Olaf Scholz, Defeated SPD leader
Despite these challenges and setbacks for some parties, optimism remains for Germany's future. Trump expressed his confidence in the conservative alliance's success.
"This is a great day for Germany," – Donald Trump, U.S. President