BGA Cable: Germany

Situation
Coalition talks conceal fragile political environment

Sunday’s agreement between the CDU and CSU to enter coalition talks without a firm limit on refugees has in our view increased the probability of a “Jamaica” coalition between Merkel’s parties, the Greens and the FDP from ca. 60% to ca. 75%. However, we expect big divisions to
subsist, especially as the CSU’s right flank will remain under pressure from the AfD in Bavaria going into next year’s state election. With much of the recovery in the EUR dependent on German political stability, investors who ignore German political tail-risk do so at their own peril.

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Our Associates are closely monitoring developments so we can keep you updated on the political situation in Germany and their potential implications for financial markets. Contact us to schedule a call with our experts for more detailed views. 

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