The ecstasy and the agony.
Angela Merkel scored a resounding election victory but by apparently falling just short of an overall majority, while her FDP coalition colleagues failed to get the 5 percent share of the vote needed for any parliamentary representation, she is probably going to have to turn to the centre-left SPD to form a government.
An SPD/Greens/left coalition is not impossible but having secured 42 percent of the vote, the tune is Merkel’s to call.
A grand CDU/SPD coalition is favoured by the German public, according to the polls, and could lead to some policy shifts, and certainly a lot of haggling over key positions in government (will Wolfgang Schaeuble remain as finance minister?) but is unlikely to lead to any seismic shifts, particularly in euro zone policy. The anti-euro Alternative for Germany (AfD) fell just short of 5 percent but having come from nowhere in just seven months, it has put down a marker.
All the parties will hold press conferences today so next steps could become clearer, although the first key meeting is probably an SPD convention on Friday. The euro got the smallest of upticks from the election result while German Bund futures have opened modestly higher with the assumption of policy continuity holding firm.
The history of the euro zone crisis shows that Merkel has had to tread very carefully to keep public opinion, the Bundestag and Germany’s powerful constitutional court on side and a government of whatever hue will face those same constraints. If she tried to rule alone, she would be prey to malcontents in her CDU and CSU sister party, while the centre-left has a strong grip on the upper house of parliament.