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Germany: a predictable election?

September 7th, 2017

Graphic: The most recent German polling, further details available here

On the face of it, the German elections are remarkably unexciting. Chancellor Merkel’s Christian Democrats (CDU/CSU) has been leading in the polls ever since the last election, and her only serious challenger, Martin Schulz of the Social Democrats (SP), has fallen back after an early bounce. Four other parties are competing for third place: the free-market liberals (FDP), the ex-Communist Left (Linke), the Greens and the anti-immigrant AfD. The current polls, which as you can see above are very consistent:

However, there is some scope for surprises and Ladbrokes offers opportunities worth considering:

First, note that if any party drops below 5%, they normally get zero seats (the system is otherwise almost exactly proportional). Both FDP and AfD narrowly missed out last time, and it’s not impossible that this could happen to them or to the Greens.

Second, when considering coalitions, you can rule out the AfD, who are not seen as “salonfaehig” (“the sort of people you might sit in a room with”): they are more openly anti-immigrant than UKIP, for instance, and the CDU see them as a threat rather than a potential partner.

Third, minority governments are rare in Germany, because of the tremendous weight given to stability. This makes the ideologically comfortable coalition of CDU and FDP less likely than one might think: with about 45-46% of the votes, they are likely to fall short. That makes the Ladbrokes odds of 6/4 on this combination look too skimpy.

Adding the Greens would make it a fairly comfortable majority, and Merkel has been careful to keep this possibility open, which has a precedent at local state level. The Greens and FDP are not natural allies as the Greens tend to want tighter regulation, but they might be a balanced partnership for the CDI in the middle. This so-called Jamaica coalition is 6-1 on Ladbrokes, which looks worth a punt. More so, in my opinion, than the third option, a continuation of the CDU-SPD partnership, which is marked up at 7-4 but depends on the SPD masochistically agreeing to continue the steady decline of junior partners. I’m sure Merkel would be up for it, but I think the Social Democrats may well have had enough.

As for the other markets, CDU most seats is a banker, but at 1-25 not an exciting one. The Best Third Party bet makes AfD the strong favourites, which isn’t especially borne out by the polls and may reflect the same phenomenon as punters overestimating Le Pen and Wilders. Some punters would like a far-right triumph, others extrapolate from Trump. It’s probably the most likely, but not as tight as 7-4. The Linke at 3-1 may be a better bet as they tend to slightly over-perform their polling. If you think the AfD will in fact also overperform in an election favouring the extremes, then the 10%+ market is probably better, offering 2-1 odds.

The Bertelsmann Foundation’s survey of European opinion is illuminating. 59% of Germans are satisfied with the direction of the country (UK: 31%). 51% are satisfied with the state of EU democracy. 80% think of themselves as centrists (Britain 67%, France 51%). There is some dissatisfaction (only 28% like the direction of the EU), and there is a slim majority for views left of centre, but overall Merkel’s unideological approach clearly reflects the state of opinion.  Possibly the best bet on the election is simply Betfair Exchange’s 1.12 on Merkel being the next Chancellor. It’s very hard to see any conceivable alternative.

Nick Palmer

Nick Palmer was the Labour MP for Broxtowe from 1997 to 2010 and has contributed to PB since 2004.