After sixteen years at the helm, German Chancellor Angela Merkel has stepped down, so this week’s federal elections have an extra layer of intrigue and fascination for political punters. Voting will take place on September 26, and it has been a rollercoaster ride according to the opinion polls.
|Next German Chancellor
|Alice Weidel/Tino Chupralla
|Janine Wissler/Dietmar Bartsch
After four election victories, the name of Angela Merkel does not appear in the markets for the next Chancellor, and judging by the current odds, there could be an end to the 16-year dominance of the center-right CDU/CSU. SPD leader Olaf Scholz, who has been in position for just over a year, is the current betting favorite, while Merkel’s successor, Armin Laschet has fallen behind, though is still a long way clear of the Greens and their candidate Annalena Baerbock.
If you thought the US system of elections was complicated, that is nothing compared to the German approach! These federal elections will decide the composition of the Bundestag, the German parliament. After the election, the majority party (or coalition) forms a government and (through the President) nominates the new Chancellor, who is then approved by the Bundestag.
Unlike in the US, German elections are run on a proportional representation basis. Every voter has two votes, one for directly elected representatives (of which there are 299), and one for a general ‘party list’ which is then used to allocate the remaining seats. The total number of seats in the Bundestag is nominally 598, but it varies widely. The last Bundestag had 709 members, although only seven of Germany’s 47 official parties had seats.
Once the election is over and the results declared, the wrangling can begin. As no single party is likely to have a majority, the government is usually a coalition of two or more of the main parties, with the biggest party likely, though not certain, to have its leader installed as Chancellor.
Having been the junior partner in three of the last four German governments, the SPD had been on course for more of the same but since the beginning of August, there has been a massive turnaround in their fortunes. From languishing in third place in the polls they have surged into the lead, as German voters have deserted Laschet in favor of the dull but statesmanlike Scholz. There is still time for Laschet to turn it around, and he could yet emerge as Chancellor through the inevitable coalition wrangling, but his perceived lack of gravitas is likely to count against him.
September has seen the CDU/CSU consolidate but it remains in the low 20s, while the SPD is consistently around the 25% mark. The big losers according to the polls could be the Greens. For most of the year, they were the clear second favorites, according to the polls, leading to speculation that Baerbock could even become the first Green Chancellor. That possibility now seems unlikely but as the third biggest party, the Greens are likely to have a big say in the new government.
The vote share markets for the major parties are often a good opportunity for political punters and the current odds look a little skewed. The CDU/CSU Over/Under is set at 23%, but despite their recent slump, they haven’t secured less than 33% of the vote in their last four elections, and with neither of their main right-wing rivals, the AfD and the FDP, having made a breakthrough, they could be in a position to benefit from last-minute switching. Backing Overlooks like the best bet here.
The Over/Under on the SPD appears to be about right at 26%, as that is higher than their percentage in each of the last three elections and is roughly where they are currently in the polls. For the Greens, I’d be inclined to back Under 16%, as they have not registered a result higher than 11% in the last four elections and their opinion poll support has crumbled throughout the year.
Predicting the make-up of the governing coalition has become an art form in German politics and the politics market this time around makes for fascinating reading.
History shows that two-party coalitions are a lot easier to build and maintain than three-party deals, but the way this election is shaping up, a two-party arrangement looks unlikely. The polls suggest that another Grand Coalition between the SPD and the CDU/CSU won’t provide a majority of Bundestag seats, and the SPD is likely to prefer working with the Greens, on course to be the third party.
An SPD-Green coalition is also likely to fall short of the required number of seats, so either the far-left Linke party or the libertarian FDP are the most likely additions. As the FDP is on course to have significantly more seats than Linke, they are in a strong position to be the third member of any deal, and the so-called Traffic Light coalition of SDP-Green-FDP currently looks like a good bet.