Germany’s blue-chip DAX 40 index fell nearly 2% after a new political crisis erupted in Berlin, triggered by “conservative” leader (so conservative he reneged on his election promises to halt runaway speding and crammed through a fiscal timebomb in the last days of the previous government) Friedrich Merz’s failed bid to become the country’s 10th postwar chancellor.
Merz needed 316 votes out of 630 to secure the chancellorship but received only 310, falling short of a majority despite his coalition holding 328 seats. Because the vote was conducted by secret ballot, the identity of those within his own party who defected remains unknown. The outcome prevented his swearing in on Tuesday and pitching Europe’s biggest economy into uncharted territory.
While the conservative leader is still expected to take charge of a ruling coalition of his CDU/CSU bloc and the Social Democrats, it was the first time since World War II that an incoming chancellor failed to secure the backing of lawmakers in the first round of voting in the Bundestag and “triggered chaos in Berlin’s government quarter”, Bloomberg reported.
After the result was announced, a visibly shaken Merz left the chamber for emergency talks with his parliamentary group, the usual seamless choreography that accompanies a change of government leader in Germany in tatters.
He was due to be formally appointed by President Frank-Walter Steinmeier later on Tuesday and then sworn in by Bundestag lawmakers before a handover with outgoing Chancellor Olaf Scholz and a first meeting of his new cabinet.
Manfred Güllner, head of the Forsa polling group, told The Wall Street Journal this outcome is “dramatic,” adding, “Even if Merz makes it in a second round, he is now damaged.”
The immediate response in local markets was a 1.8% drop in DAX 40. German bonds trimmed declines, with the 10-year notes trading as low as 2.52% versus 2.55% before the vote.
A headline that just crossed Bloomberg moments ago indicated that the German Parliament will reconvene at 3 p.m. local time.
- GERMAN PARLIAMENT TO RECONVENE AT 1500 LOCAL TIME, 1300 GMT, ON TUESDAY AFTER FAILURE OF FIRST VOTE ON CHANCELLOR – N-TV
German reporter Julius Betschka wrote on X, “The next round of voting is scheduled for 3:15 p.m., according to @sternde info from both factions. Faction meetings beforehand.”
On the other hand, if Merz fails to get elected for the second time, will that make Germany’s political crisis doubly as big?
AP News provided color on what’s next:
The lower house of Parliament — called the Bundestag — has 14 days to elect a candidate with an absolute majority. Merz can run again, but other lawmakers can also throw their hat in the ring. There is no limit to the number of votes that can be held within the two-week period.
If Merz or any other candidate fails to get that majority within the 14 days, the constitution allows for the president to appoint the candidate who wins the most votes as chancellor, or to dissolve the Bundestag and hold a new national election.
Trips abroad planned for Wednesday, to Paris for talks with French President Emmanuel Macron and Warsaw to meet Polish counterpart Donald Tusk, will almost certainly be postponed.
All this takes place as Germany’s anti-immigrant party AfD, which was formally classified as right-wing extremist last week by the domestic security service, has overtaken Merz’s bloc in some polls and is now the main opposition force in the Bundestag.
AfD lawmakers celebrated Merz’s stumble, with co-leader Alice Weidel saying in a post on X that “this demonstrates what a weak foundation” his coalition was built on.
“As AfD, we have set out to turn this country upside down. We are ready to take on government responsibility. And we call for reason to prevail. Mr. Merz should step down immediately. The path should be cleared for new elections in our country,” Weidel said.
In a subsequent TV interview, Weidel said her party, which finished second in the Feb. 23 national ballot, is ready to join a coalition government.
“We can only demand that common sense prevails, Mr. Merz withdraws and the path is opened for a fresh election,” she added.
“Hardly anyone expected this scenario,” Andrea Römmele, a politics professor at the Hertie School in Berlin, told public broadcaster ARD. “A chancellor must have a majority to be able to govern. If it’s not enough at the beginning, what will happen when the going gets tough?”
Jan van Aken, the co—leader of the far-left opposition Linke party, also weighed in.
“If he can’t even unite his own people here in the Berlin bubble, how is he supposed to unite the country?” van Aken told public broadcaster ARD. “The CDU must now ask itself whether Merz is the right man for the job.”