Charlotte Street Partners

Germany’s Green conundrum

Written by Maria Julia Pieraccioni, associate 
Edited by Iain Gibson, associate partner
27 August 2021

Good morning,

Our daily briefings have taken on something of a Germanic flavour recently and with good reason. Love her or hate her, outgoing chancellor Angela Merkel is a tough act to follow. As the curtain closes on her chancellorship, eyes remain peeled on the German elections on 26 September, which is set to decide the Germany’s new coalition government and leader. But, as we have seen with many elections over the past year, this is not just a simple turnover of power.

This election has the potential of shaping the future of German and European politics whilst severing its ties with the past.

Armin Laschet, chancellor Merkel’s spitzenkandidat—or top candidate—and leader of the CDU has lost a monumental majority in the last twelve months. Politico’s “Poll of Polls” forecasted his party had 36% of votes in September 2020, when candidates were announced. That figure declined slowly over the months, and then significantly when, in late July, Laschet was pictured laughing during a walk-through of a flooded town in Germany. The CDU is now forecasted at 23%, which threatens the party’s almost uninterrupted 70 years in government.

However, even more striking is the rise of both the left wing SPD and the Green party. The SPD is now neck-to-neck with the CDU, with polls showing it with 22% of votes. While the SPD has ruled in the coalition government for several years in the past, their rapid rise among electors after the floods makes a coalition government excluding the CDU ever more likely. In terms of popularity of chancellor candidates, an RTL/NTV poll suggests SPD’s Olaf Scholz as the top choice, followed by the Greens leader Annalena Baerbock.

The announcement of Annalena Baerbock as the Greens’ candidate for chancellor gave the party a momentary lead in May, at 25%, according to the Poll of Polls. Now, the Greens stand at 18%, which is behind the SPD and CDU, but not by much. While it is unlikely they have a real shot at the chancellorship, there is a real possibility they will become part of Germany’s government in some capacity. A Walrecht poll, reported by The Guardian, showed that three out of seven coalition outcomes contained the Green party.

Ahead of COP26, and with the climate crisis currently visible on Germany’s doorstep, an alliance between one of the two bigger parties and the Greens could shape the future of German policy, especially when it comes to its net zero ambitions. Today, a handful of the world’s democracies see the Greens in governing coalition, including Austria, Belgium, Finland, Ireland, Luxembourg, New Zealand and Sweden. Scotland joined that list recently, albeit with a “cooperation agreement” rather than a formal coalition.

The identity of Germany’s next chancellor is still unknown, although we have to wonder when we look at the available candidates, whether or not Angela Merkel’s legacy will leave shoes too big to fill.

News

There have been twin bomb attacks at Kabul airport, one at Abbey Gate where US and British forces have been stationed, and one at a nearby hotel, as reported by the Pentagon. There are unconfirmed reports of at least 60 deaths and several civilian casualties. The attack comes in the wake of rising warnings of militant attacks ahead of the 31 August deadline to evacuate people from the Afghan capital. ISIS appears to have claimed responsibility for the attack.

Latest Home Office figures report that the backlog for asylum applications has reached a record high of 70,000 people. The number is almost three quarters higher than two years ago, despite a drop in the number of asylum applications made in the last year. (£)

The Liberal Democrats have outlined a proposal to ban new listings of fossil fuel companies from the London Stock Exchange. The party stated that the move could boost the UK’s standing as a leader in tackling climate change. According to the plan, fossil fuel firms already listed would have two years to produce plans about reaching net zero emissions by 2045 or risk being delisted.

Business and economy

The UK government’s announcement to reform its future data laws has been met with resistance by the EU, which has warned it will sever a data-sharing agreement with the UK if the proposal goes through. The EU warned the reforms would pose a threat to EU citizens’ privacy, including removing cookie pop-ups informing internet users that they are being tracked online. (£)

A report by Hargreaves Lansdown revealed that more than 2 million Britons receive less than £100 per week from state pension payments, which is lower than the full state pension rate of £179.60 per week. To qualify for the full state pension, workers have to have 35 years of National Insurance credits, which excludes those who have taken time from the workplace, lived abroad or earned under the threshold for paying National Insurance.

After months of speculation on whether central banks will raise interest rates to curb rising inflation, the Bank of Korea has raised its base interest rate on Thursday. It is the first hike by a major central bank in the wake of Covid-19.

Columns of note

To walk away or to rule, that is the question the Greens are facing in their coalition with the SNP, posits Dani Garavelli in The Guardian. According to Garavelli, on the one hand the SNP stands to win a facelift in their environmental credentials ahead of hosting COP26 in November through a coalition with the Greens. On the other, the Greens are faced with a tricky decision: will they be able to push the SNP to align closer with their agenda or will ruling in government prove a challenge to their principles?

In The Times, James Marriott vindicates suburban living after years of “passionate abuse” by the twentieth century’s intelligentsia. Whether the pandemic forced us to re-evaluate our spaces, or rising price and stagnant wages make for unaffordable city living, Marriott suggests suburbia is going through a renaissance, highlighting the calmness, tranquillity and normalcy that we escape from in our twenties and early thirties but so innately require after that. (£)

Cartoon source: New Yorker

Markets

What happened yesterday?

London stocks closed trading weak yesterday, with the FTSE 100 ending down 0.4%. UK investors are eyeing tomorrow’s Federal Reserve speech by Fed chair Jerome Powell, as well as digesting the latest US jobless data releases.

Similarly, European stocks ended negatively, with the pan regional Stoxx 600 index down 0.3% at close. Germany’s DAX was down 0.42% due to a German consumer survey showing weakened consumer sentiment.

The pound weakened, trading down 0.31% against the euro, at €1.1655, and down 0.47% against the dollar, at $1.3697.

What’s happening today?

Final dividend payment date
Bloomsbury

Interim dividend payment date
Dunedin Inc.

Special dividend payment date
Bloomsbury

Source: Financial Times

did you know

From 1994 to 2014, Briton’s use of swear words in everyday conversation fell by 27%. (Source: @qikipedia)

Parliamentary highlights

House of Commons

The House of Commons is in recess. The House will next sit on 6 September.

House of Lords 

The House of Lords is in recess. The House will next sit on 6 September.

Scottish parliament 

The Scottish parliament is in recess until 30 August.

Share this post

Share on facebook
Share on twitter
Share on linkedin
Share on email