The three parties in Germany’s fractious ruling coalition struggled to present a united front after their drubbing in key regional votes, stoking concerns about the ability of Chancellor Olaf Scholz’s alliance to govern effectively for the remaining two years of its term.
(Bloomberg) — The three parties in Germany’s fractious ruling coalition struggled to present a united front after their drubbing in key regional votes, stoking concerns about the ability of Chancellor Olaf Scholz’s alliance to govern effectively for the remaining two years of its term.
It was a particularly bruising night for Finance Minister Christian Lindner’s Free Democrats, who crashed out of the parliament in Bavaria and were teetering on the 5% threshold required to retain their representation in Hesse, according to preliminary results.
The business-friendly FDP has been the most troublesome member of Scholz’s alliance, publicly undermining the Greens’ efforts to push their climate agenda and portraying itself as a force of restraint looking to protect ordinary citizens from excessive government interference.
On Monday, a grim-faced Lindner blamed the party’s woeful performance on the constraints of coalition government, which he said had hindered the party’s efforts to get its message across on issues including the economy, migration, climate and energy policy, and the question of social freedom versus bureaucracy.
“The coalition parties are not being assessed individually, but rather people are judging the coalition as a whole,” he told a news conference. “It’s clear that there must be critical reflection on the government’s work with each other to better meet the expectations of citizens.”
While he broadly agreed with calls from his Social Democrat and Greens partners for more unity and less public bickering, he lashed out at them when asked by a reporter what contribution the FDP could make to coalition harmony.
“Those who have voiced such appeals have already made demands in terms of content,” Lindner said. A planned Oct. 20 meeting of senior officials in the ruling alliance would be the appropriate forum to discuss what’s next, he added.
Carsten Brzeski, global head of macro at ING, said Scholz’s coalition had “taken an enormous blow” that threatened to bring government business to a halt. Opposition parties are benefiting from voters expressing their dissatisfaction with the government and not necessarily from offering more effective policies, he said Monday in a note, identifying two scenarios.
“In the first, the federal government takes these election results as a signal to speed up reforms and investments, and to improve teamwork,” he said. “The second is that every coalition party will only focus on itself and on how to reach the best possible outcome at the next federal elections, which could basically mean a reform standstill.”
In Hesse, where the SPD lost almost 5 percentage points compared with the previous vote in 2018, the result hit close to home for Scholz as his interior minister in Berlin, Nancy Faeser, was the party’s lead candidate.
At a news conference Monday alongside Saskia Esken, an SPD co-leader, Faeser made another appeal for coalition unity.
“The most important thing is that people see that we are improving things in their interest,” she told reporters. “We are seeing that there is currently a lot of uncertainty, and they must all have the feeling that we stand together as a coalition.”
The far-right Alternative for Germany party continued its surge, rising to second place in Hesse — home of financial capital Frankfurt — and third in Bavaria, a development that Esken said was “catastrophic” for Germany. The conservative CDU/CSU bloc retained power as expected in the two regions, which account for about a fifth of the German electorate.
‘Noisy’ Alliance
Holger Schmieding, chief economist at Berenberg, said he expects the ruling alliance to “soldier on” until the next election due in 2025 but that “it may remain noisy.”
“The three parties may feel a need to sharpen their profile by publicly objecting to policy proposals from their coalition partners ahead of finding compromises in the end,” he added. “Whether or not the AfD can continue its uptrend may depend decisively on how Berlin handles migration and economic issues in the meantime.”
–With assistance from Kamil Kowalcze.
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