German Federal Election: CDU/CSU Coalition with SPD only Feasible Power Option

Clear victory for CDU/CSU; Historic low for SPD; FDP and BSW fail to make the cut

Coming in with a comfortable lead, the conservative CDU/CSU with (soon-to-be chancellor) Friedrich Merz secures the most votes with 28.52%. This marks an improvement compared to their 2021 result (24.1%), but they were unable to gain support during the crucial campaign phase—over the past year, their poll numbers remained consistently around 30%. 

The AfD comes in second with 20.8% of the votes. The right-wing populists managed to capitalize on the intense final phase of the campaign and made visible gains in recent months. They doubled their 2021 result (10.4%). 

In third place is the social-democrat SPD with a historic low at 16.41%. The party of (soon-to-be ex-) Chancellor Olaf Scholz suffers a significant loss compared to the 2021 federal election (25.7%), though they managed to improve by a few percentage points during the final campaign phase. 

The Greens follow the SPD with 11.61%. Polls in recent weeks and months showed no discernible “campaign effect.” In 2021, the Greens achieved their best-ever result (14.7%). While their current outcome does not quite match that figure, it’s still the second best in the party’s history. 

The socialist Left Party secures a surprisingly clear entry into the German Bundestag with 8.77% after a significant final sprint in the campaign. In 2021, with a result of 4.9%, the party had fallen below the 5% threshold but was able to remain in parliament due to a specific clause in the complex German voting system related to the number of electoral districts won. Over the past months, the outlook again seemed bleak for the party. However, in the final weeks, a remarkable upward trend emerged. 

The liberal FDP fails to enter the German Bundestag with 4.33%. Despite a brief resurgence in some polls shortly before the election, the outcome had been foreseeable for months. The Liberals had been trending below the 5% threshold for over a year. Having achieved a strong 11.4% in 2021, the party now finds itself out of the Bundestag for only the second time in its history. 

The left-wing populist BSW, founded just a year ago, also falls short with 4.97%. While normally not entirely surprising for such a young party, the result comes unexpectedly given its initially strong poll numbers well above 5%. Even though the BSW entered government responsibility in the states of Thuringia and Brandenburg last year, failing to enter the Bundestag raises existential questions for the party.

 

CDU/CSU and SPD gather enough seats for a two-party coalition

In terms of coalition building, CDU/CSU cooperation with the Left Party is off limits due to the CDU/CSU’s party line. The AfD is a political pariah. Under these circumstances, the election result allows for only one viable two-party majority option: a revival of the (former) “Grand Coalition” of CDU/CSU and SPD. With a combined number of 328 seats, they command sufficient majority in the German Bundestag. 

The upcoming talks on potential cooperation will be shaped by an interesting dynamic: 

• The CDU/CSU is the clear election winner, securing significantly more votes than the SPD. 
• However, CDU/CSU has no alternative power option—meaning that its strong performance does not translate into an equally strong negotiating position. 
• The SPD will try to use this to its advantage. At the same time, it has a significant interest in joining the government: 
  • It will remain in power. 
  • There are more government positions and offices to be allocated among the party’s leadership. 
  • Given the growing threat to the democratic system from right-wing populism and the current geopolitical challenges, it is unlikely that the SPD will ultimately shy away from the overall political responsibility.

 

Relief for businesses, red lines on social policy

From the exploratory talks to the virtually inevitable coalition negotiations, here are a few things that can be expected:

• CDU/CSU agenda: The CDU/CSU will push its agenda as the clear senior partner in the coalition: tax cuts and reduced reporting obligations for businesses, cuts in social spending, and less ambitious climate policies. 
• SPD red lines: The SPD will draw red lines on social policy issues. The main points of contention with the CDU/CSU will likely be the SPD’s planned minimum wage increase and the CDU/CSU’s proposed cuts to social security contributions. The SPD will also consider the pension level as non-negotiable. 
• Common ground: A quick agreement will likely be the abolition of Germany’s Supply Chain Due Diligence Act. Originally introduced by SPD Labor Minister Hubertus Heil and passed at the end of Angela Merkel’s last Grand Coalition in 2021, the CDU/CSU has long opposed it. Last year, the SPD also backed its repeal, given the adoption of the EU-wide Corporate Sustainability Due Diligence Directive (CSDDD). A swift reduction in electricity taxes and grid fees is also expected, as both parties agreed on this in their election manifestos. Furthermore, there are commonalities in plans for digitalization and reducing bureaucracy in administration, as well as in the investment needs for energy and transportation infrastructure. 
• Points of contention: However, CDU/CSU and SPD disagree on the extent to which renewable energies should be subsidized. CDU/CSU plans significant cuts and advocates for a more market-driven approach, while the SPD calls for increased support and funding. In addition to the major points of contention already mentioned, there is also likely to be significant disagreement on taxes and social contributions. While the SPD aims to finance necessary investments primarily through higher taxes, particularly on higher incomes, CDU/CSU seeks to lower taxes and provide relief for businesses. Forecast: The parties are likely to agree on a revision of Germany’s strict public debt rules, the Schuldenbremse (debt brake), in favor of investment spending. There will also be some form of subsidy scheme or tax incentives. However, whether the SPD idea of a flat 10% depreciation on investments in Germany (“Germany Bonus”) will gain traction remains questionable. 

• Key bargaining chip: immigration. SPD and CDU/CSU are at odds with each other on this issue. However, the SPD might be more easily convinced than vice versa, although only to secure some wins elsewhere. Further room for negotiation can be found in labor market policy, where CDU/CSU and SPD could agree on strengthening collective bargaining agreements while incorporating more flexibility through opt-out clauses. Working hours flexibility could also be part of a deal: CDU/CSU secures a shift in German labor law from measuring maximum working hours from a daily to a weekly basis, while the SPD secures concessions on regulations for remote work. There is also potential for compromise regarding the Bürgergeld (“citizen’s income,” the SPD’s brainchild that just three years ago updated the German minimum income scheme for the unemployed). While the SPD will not agree to the CDU/CSU’s demand for its abolition, it has recently shown openness to tighten its application. Additionally, the parties could agree on a pragmatic implementation of the National Circular Economy Strategy, allowing each to present it as a success to their respective voter base.

   

Timeline
 

Friedrich Merz had outlined his ideas before the election on how a swift government formation could proceed “by Easter” (April 20): a small exploratory team will determine the key strategic issues in the areas of the economy, immigration, and defense in advance, so that the coalition negotiations do not have to focus on the fundamentals. 

Merz’s team consists of six people: 

• From the CDU: Friedrich Merz himself, along with Secretary General Carsten Linnemann and Parliamentary Manager (“whip”) Thorsten Frei; 
• From the CSU: Party leader and Bavarian Minister President Markus Söder, Secretary General Martin Huber, and the CSU group leader in the Bundestag, Alexander Dobrindt. 

Who the SPD will put forward in this role remains open. Chancellor Olaf Scholz has announced that he will not participate in the negotiations, nor will he be part of a new government under Friedrich Merz. The only truly secured name at the moment is co-party leader Lars Klingbeil, who is also initially aiming for the position of parliamentary group leader in the Bundestag. In addition, the current Federal Minister of Defense, Boris Pistorius, and Secretary General Matthias Miersch could play a role in the upcoming discussions. The future of Saskia Esken, Klingbeil’s counterpart at the top of the SPD, remains uncertain.

 

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