Archive for the 'Germany' Category

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Germany: a predictable election?

Thursday, 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.



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This year’s German election: Angela Merkel’s re-election might not be as certain as the betting markets think

Monday, January 30th, 2017

Latest German polls

Nick Palmer on the other big European contest in 2017

The general assumption that Merkel is certain to be re-elected as Chancellor after the elections later this year is reflected in the betting odds. At the time of writing, her Betfair odds are 1.73. However, it’s always a good idea for punters to check that assumptions remain valid.

The surprise selection of Martin Schulz as her Social Democrat (SPD) challenger has produced an immediate bump in SPD ratings – every poll taken since the decision has seen them up by 1-3 points, and they are now close to the last election level. Schulz differs from the expected alternative (Gabriel) in several ways: he is not a member of the Government so can criticise Merkel more easily; he is a sharp-edged speaker with a knack of getting in the headlines; he is more obviously pro-European at a time when many Germans think it important to rally round the EU. Most importantly, he is a bit harder to see as part of the traditional establishment which is struggling in every country.

But is there a path to victory for him? Yes, but not an easy one. Above are the current polls:

Leaving aside INSA, which always shows Merkel’s CDU lower (and the AfD higher), the CDU is on a stable 36% or so, which would be a drop of over 5% from last time. It looks as though the free-market centre-right FDP will get back in, on 6-7%. Against that, Schulz would have the SPD on say 24%, and the Greens and Left on 9-10% each. The old assumption that the SPD would not govern with the help of the ex-communist Left has been eroding. There have been fairly harmonious partnerships at state level, the communist GDR-era leaders have mostly retired, replaced by more generic leftists, and the Cold War is starting to seem yesterday’s issue. Schulz, unlike his predecessors, has not quite ruled it out. So on current polling he could potentially have a slim lead.

This leaves out the AfD, who are down from their peak as the refugee crisis is perceived to have eased slightly, but still on 11-14%. However, they are deeply divided internally and seen as dangerous rivals by the CDU, who would not govern in 2017 on the basis of their support (perhaps, like the Left, they will one day be seen as “salonfaehig” – suitable to be welcomed into the living room – but they’re some way off). If the only basis for a Merkel majority was AfD support, she would step down, like her Swedish Conservative counterpart, who preferred to yield power to the Social Democreats rather than carry on with far-right Sweden Democrat support.

Nonetheless, an SPD/Left/Green government would be well short of a majority on these figures, so unless they pick up a further 6% or so from the centre or right, it isn’t going to happen. What, though, if the FDP drop by just a single point and fall under the 5% threshold again? At that point, a CDU-led government with 35% against 43% for the centre-left will start to look less of a slam-dunk. A CDU-SPD coalition still looks likely – but might it be under a new leader? Or could one imagine an SPD-FDP-Green minority government?

Possibly – but in my view probably not. The answer to the question is, perhaps surprisingly, that this is one occasion when the markets are probably underestimating the favourite: she is, under most likely circumstances, likely to survive with a reduced majority, and anything above 1.4 is probably a bet worth considering. But laying Schulz may be the better strategy, as it covers the possibility of a really bad CDU result leading to a new CDU leader.

Nick Palmer was MP for Broxtowe 1997-2010, and works as a translator from German, giving him longstanding daily contact with the German media.