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There has been a significant increase in popular support for anti-establishment political parties over the past few years.  Currently, these parties are not part of the government and are unable to set the political agenda.  After the referendum in Italy and the presidential elections in Austria and France, our analysts look at the next political event to shape the European political agenda.

German General elections (Aug to Oct 2017)

Since the post war period, the power in the Bundestag has remained in the hands of the two major groups – the centre-right Christian Democratic Union (CDU/CSU) and the centre-left Social Democratic Party (SPD). At the federal election in 2013 the CDU/CSU union secured its position as the largest parliamentary group for the third consecutive time, with 310 seats (out of 630), followed by the SPD with 193 seats. The remaining seats were split between smaller fractions of the Left (64 seats) and the Greens (63 seats).

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Assuming the Bundestag majority continues to be held by a moderate government, a rise in the Eurosceptic movement across the region that has also spilled over into Germany currently looks unlikely to change political trends in Germany dramatically. However, with the next elections moving closer and with the two major groups continuing to lose support marginally, the CDU and SPD’s attempts to regain voters will come into focus. The latter will also be important in the context of the significance of the German stance on fiscal discipline across the region and, in particular, potential Greek debt reductions.

For full details of our FX and Rates strategy based on this analysis, download the full report here 

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