Germany: Political instability? – Deutsche Bank

Deutsche Bank analysts point out that on Saturday, the result of the SPD leadership vote caught German politicians and observers by surprise.

Key Quotes

“With 53%, the Groko-critical team of Norbert Walter-Borjans and Saskia Esken won over OIaf Scholz and Klara Geywitz, who only gained 45% of the members' votes.”

“The vote for Walter-Borjans and Esken increased the probability of the Groko falling apart but does not translate into an automatic or immediate collapse of the government coalition. Our baseline view remains that the new party leaders and delegates at the SPD's December 6-8 party conference will support a (possibly conditional) continuation of the Groko until the 2021 elections and that the SPD will not pull out of Groko immediately.”

“Still, as the CDU/CSU are reluctant to renegotiate the Groko treaty, non-negligible risks of a premature end the government coalition remain.”