Editorial & Advertiser disclosure

Global Banking and Finance Review is an online platform offering news, analysis, and opinion on the latest trends, developments, and innovations in the banking and finance industry worldwide. The platform covers a diverse range of topics, including banking, insurance, investment, wealth management, fintech, and regulatory issues. The website publishes news, press releases, opinion and advertorials on various financial organizations, products and services which are commissioned from various Companies, Organizations, PR agencies, Bloggers etc. These commissioned articles are commercial in nature. This is not to be considered as financial advice and should be considered only for information purposes. It does not reflect the views or opinion of our website and is not to be considered an endorsement or a recommendation. We cannot guarantee the accuracy or applicability of any information provided with respect to your individual or personal circumstances. Please seek Professional advice from a qualified professional before making any financial decisions. We link to various third-party websites, affiliate sales networks, and to our advertising partners websites. When you view or click on certain links available on our articles, our partners may compensate us for displaying the content to you or make a purchase or fill a form. This will not incur any additional charges to you. To make things simpler for you to identity or distinguish advertised or sponsored articles or links, you may consider all articles or links hosted on our site as a commercial article placement. We will not be responsible for any loss you may suffer as a result of any omission or inaccuracy on the website.

Headlines

Posted By Global Banking and Finance Review

Posted on February 12, 2025

Featured image for article about Headlines

By Andrey Sychev and Sarah Marsh

BERLIN (Reuters) - Germany could face months of political uncertainty after the federal election on Sunday as the winning party will almost certainly have to form a coalition to secure a majority.

Here is a summary of the most likely coalitions and the compromises that will be necessary to reach agreement:

GRAND COALITION (Conservatives and Social Democrats)

Germany's next chancellor looks set to be Friedrich Merz, whose opposition conservative CDU/CSU bloc is far ahead in the polls, but he will need a partner, or possibly two. On a live TV debate on Sunday, Merz said he would like to have two coalition options.

A so-called grand coalition of the two big centrist parties, the CDU/CSU and Chancellor Olaf Scholz's centre-left Social Democrats (SPD) is seen as the most likely election outcome.

The SPD and CDU/CSU have already governed together four times since World War Two - three times under the leadership of former conservative Chancellor Angela Merkel.

Merz, however, has moved the bloc further to the right, taking a tougher stance on migration than Merkel and a more pro-market position on the economy.

The CDU/CSU wants broad tax cuts while the SPD wants to raise taxes for high-income earners and revive a wealth tax. That means both could struggle to agree on deeper reforms, except a possible easing of the debt brake.

Probability: 60% according to the Eurasia Group.

KIWI (Conservatives, Greens)

A "Kiwi" coalition of the CDU/CSU and the Greens - named because of their respective black and green colours - is another possibility, although considered less likely. The two may not achieve a majority.

While they share some foreign policy views such as the need to provide more decisive support to Ukraine, they lie far apart on domestic policy and in particular on migration.

That rift deepened last month when Merz chose to pass a motion urging a crackdown on irregular migration with support of the far-right Alternative for Germany (AfD). The Greens were among his most strident critics.

Markus Soeder, head of the CSU Bavarian sister party of the CDU, has frequently ruled out a Kiwi coalition and Merz has repeatedly criticized the Greens party leader Robert Habeck as a "failed" economy minister, ruling out extending his tenure.

It would be an unprecedented alliance at national level although the two govern together in three German states.

Probability: 15% according to the Eurasia Group.

KENYA (Conservatives, Social Democrats, Greens)

Scholz's three-way coalition, the first in Germany in decades, collapsed due to infighting last November. But Merz may be forced to find two partners if some of the smaller parties like the Free Democrats (FDP) and far-left Die Linke reach the 5% threshold to win seats, fragmenting the seat allocation. 

If no two larger parties can form a majority, the CDU/CSU, SPD and Greens could decide to form a so-called "Kenya" coalition, as their colours match those of the Kenyan flag.

Such coalitions have only occurred rarely at state level.

Probability: 10% according to the Eurasia Group.

GERMANY (Conservatives, Social Democrats, Free Democrats) 

Another unlikely three-way combination could be the "Germany" coalition of CDU/CSU, SPD and FDP, named after the black, red and gold colours of the national flag.

It would be hard for the FDP and SPD to find common ground as a row over the budget between Scholz and FDP head Christian Lindner, who was then finance minister, led to the collapse of the three-way coalition and triggered snap elections.

Probability: 10% according to the Eurasia Group.

MINORITY GOVERNMENT

Some German states have had minority governments which seek different partners for each piece of legislation. 

However, this has never happened at the start of a new legislative period on a federal level, only after a coalition has imploded, due to fears of the instability it could create.

Some politicians though are urging parties to consider this option given how complicated it is becoming to form a coherent coalition.

Merz himself said in a 2017 interview that parties should not exclude the possibility of a minority government, although he has not commented on the issue lately.

WHAT ABOUT THE AFD?

All other parties have ruled out forming a coalition with the AfD, which is the second most popular party according to opinion polls. The strength of the party is another factor set to complicate coalition building and securing a parliamentary majority.

(Reporting by Andrey Sychev and Sarah Marsh; Additional reporting by Andreas Rinke; Editing by Alexandra Hudson and Hugh Lawson)

Recommended for you

  • Thumbnail for recommended article

  • Thumbnail for recommended article

  • Thumbnail for recommended article

;