German Coalition Partners Under Fresh Pressures After State Election Results

The first of six State elections scheduled to take place across Germany this year started in Baden-Württemberg yesterday . Despite polls predicting a comfortable victory for the CDU , the Greens secured their fourth consecutive win in the State , polling just over 30% of the vote ( Chart 1 ) . The CDU finished in second place, slightly behind the Greens, while the AfD showed significant progress compared to the last regional elections. The SPD, the federal government coalition's partner, came in fourth place with 5.6% of the vote, while the FDP and the Left Party didn’t cross the 5% threshold needed to enter parliament. With 56 seats for each party out of the 157 available, the Greens and the CDU are expected to govern the State for a third consecutive term. Cem Özdemir (Greens) will likely become Minister-President, succeeding Winfried Kretschmann (Greens), who decided not to stand for a fourth term. F or the Bundesrat (Parliament’s upper house) , no major changes are anticipated. Each of the two parties will be represented, counting for a bloc of 6 votes out of the 69 total seats . In our view, the weekend's results confirm a shift in the electorate base towards the right-wing bloc ( Chart 2 ) . The Green Party's victory can be attributed more to their specific overperformance in this State than to a fundamental realignment of the electoral base ( Chart 3 ) . Considering the combined results of the CDU / AfD /FDP bloc , their share has increased by 9 pp between the last two regional elections and by 7.4 pp in the two preceding federal elections. Similarly, the SPD/Green/Left Party bloc has lost 6.5 and 7.5 pp , respectively. Clearly, the SPD and the CDU are the biggest losers in these elections , with t he SPD unable to regain local support , votes dropping to an all-time all States low at 5.5%, and the CDU failing to curb the AfD's strong electoral momentum and win an election that was widely expected to be theirs four months ago. At this stage, we do not think it will question the federal government’s fiscal plan.