NRW state elections: Grand coalition revisited
- The 9May state elections in North-Rhine Westphalia (NRW), Germany’s most populous state, brought a resounding defeat to Merkel’s CDU.
- The toppling of the local CDU administration deprives the CDU of its majority in the German upper house, rendering key reforms on taxes, health care and energy difficult, if not impossible.
- Equally important is the signal to the liberal FDP that its quest for lean government has little popular support, whereas the opposition SPD aims at making NRW a showcase for more egalitarian policy and big government.
- In terms of fiscal policy, a stronger SPD position does not necessarily imply fiscal tightening, given plans for more spending.
Asset conclusions: on balance negative for German stocks, neutral for bonds
Please see the attached full analysis from Michael Clauss.
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