The SPD won - what will be the economic effects of the elections in Germany?

The elections in Germany were won by the SPD, which will most likely form the new cabinet at a dinner with the Greens and the FDP. We are now facing several months of coalition negotiations that may affect the market. Berliners voted to expropriate companies with more than 3000 apartments in their city.

The results of the elections in Germany

Yesterday's elections in Germany turned out to be more even than expected. The initial draw in the first exit polls turned into a small win for the SPD (25,7% vs. 24,1% for the CDU / CSU), whose leader Olaf Scholz will be a candidate for federal chancellor. The first possible coalition will therefore be the SPD-Greens-FDP. The FDP achieved a very good result (11,5 percent), becoming the most popular party among first-time voters. The Greens (14,8 percent) fared worse than the polls and expectations. Also Die Linke achieved a poor result (4,9 percent), which makes it impossible to form a coalition SPD-Greens-Die Linke, which was feared by many Germans and financial markets.

During the election evening, the chairman of the FDP proposed that first after the elections, the FDP and the Greens should come to an agreement with each other, and only then would they choose a third coalition partner - the SPD or the CDU/CSU. Such a solution, if implemented, would increase the bargaining power of smaller parties and would probably allow for the implementation of a greater number of liberal and ecological postulates that combine the programs of the FDP and the Greens. However, in order to start cooperation, the parties must come to an agreement on the issues that differ the most from them. Such areas are, for example, taxesfor which the Greens propose to increase the taxation of the richest and the FDP opts for reducing the burden on the middle class. In German politics, we are now facing several months of negotiations to select a new government, and any information or leaks from the negotiations may affect the financial markets.

About the author

Pawel Majtkowski - analyst eToro on the Polish market, which shares its weekly commentary on the latest stock market information. Paweł is a recognized expert on financial markets with extensive experience as an analyst in financial institutions. He is also one of the most cited experts in the field of economy and financial markets in Poland. He graduated from law studies at the University of Warsaw. He is also the author of many publications in the field of investing, personal finance and economy.

Along with the federal elections, there were also elections in Berlin and a referendum in which voters voted in favor of expropriating the company German living (and other companies with over 3000 flats), with 115 apartments in its possession. apartments in Berlin. It is an attempt to save the Berlin real estate market from further price increases, which is related to the continuous housing shortage. Despite the positive result of the referendum, it is not known how it could be implemented in practice and whether it would be in line with the German constitution at all. There is also the question of whether Berlin could afford to pay compensation for such action. For this reason, the shares of Deutsche Wohnen have recently broken price records and at the beginning of the year have already gained 21,61 percent.

The elections in Germany are also of great importance for our economy, which is functionally related to the German one. Germany is the highest recipient of Polish exports (28,9% of Polish exports in 2020 went to Germany). Poland is now, after overtaking the USA, the third largest exporter to Germany. Only China and the Netherlands export more to our western neighbors. Germany has invested the most in Poland in the form of direct foreign investments, since 1989 it has amounted to approximately EUR 36 billion. It is estimated that Polish investments in Germany amount to approximately EUR 6 billion. Germany also plays a significant role in the European Union, with which Poland has recently been in conflict in many areas. The departure of Angela Merkel, who argued that a more conciliatory stance towards Poland, could mean a tightening of the position of Brussels.