EZA 849 Report:

16 June 2008

GERMANY – POLITICS

Bavarian elections start to impact on national politics as CSU risks losing absolute majority

The upcoming state elections in Bavaria on 28Sep have started to impact on national German politics, with the CSU aiming to sharpen its profile on tax cuts.
For two months opinion polls have indicated that the CSU risks losing the absolute majority it has held in the state parliament since 1970.
This outcome, which would be in line with socio-economic trends, would help highlight the alternatives for national policy, potentially boosting chancellor Merkel’s chances for re-election next year.
A recovery by the CSU is likely to lead to more “muddling through” in terms of policy both before and after the elections.


Asset conclusions: weakening of CSU good for market-oriented policies and thus positive for German assets in general.

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