Merkel Wins Federal Election But Coalition Partner Below Bundestag Threshold: Final Outcome Too Close To Call

While the outcome of the election from the perspective of "the grand coalition" is still too close to call [10], Exit polls make it clear that Merkels CDU/CSU party has won the election with 42.5% of the vote. However, there are some very interesting results that could be a problem for Europe's 'program-based' nations:

• GERMAN AFD TAKES 4.8% IN FEDERAL ELECTION, ZDF EXIT POLL SHOWS
• GERMAN FDP TAKES 4.5% IN FEDERAL ELECTION, ZDF EXIT POLL SHOWS

So the anti-Euro party has more votes (nearly the 5% required to enter the Bundestag) than Merkel's current coalition partner FDP party which creates major uncertainty over the forming of a coalition [11](which took 3 weeks in 2005) - which as we noted seemed to priced into Greek stocks on Friday [12]. The pirate party is projected to have 2.5% of the vote. If the anti-Euro AfD enters the parliaments, a "Grand Coalition" appears inevitable. However, if it does not cross the 5% threshold, Merkel may end up with an absolute majority in the Bundestag and will not nead a coalition partner.

The results so far at 1810 German time...

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...after polls close, the leaders of all the major parties will give a 45-minute joint TV interview scheduled to start at 8.15pm (broadcast by ARD and ZDF) while party leaders will meet on 23 September to decide how to proceed with coalition talks.

 

The polls (and their margins of error) continue to suggest that the German elections remain finely balanced between a repeat of the current CDU/CSU and FDP coalition and a grand coalition between CDU/CSU and the SPD. While the immediate focus will be on coalition building (nb: agreement for a grand coalition took just over three weeks back in September/October 2005), we highlighted earlier this week the significant pipeline of policy decisions looming after the elections: (i) the exit strategies of programme countries (where the debate will likely be even more vociferous should the AfD reach the 5% threshold to enter the Bundestag), (ii) modalities around the SSM and second leg of banking union, and (iii) resumption of the debate on fiscal union.

Live news feed from AFP can be found here [16]:

• 1710 GMT: If Merkel's party has won an absolute majority, it will be the first in Germany since Konrad Adenauer, says Deborah Cole.
• 1708 GMT: AFP's Frédéric Happe says ARD is giving the CDU 302/598 but stresses that early indicators traditionally favour the CDU.
  1705 GMT: MERKEL'S CDU WINS ABSOLUTE MAJORITY, TV ESTIMATES SAY
• 1658 GMT: Merkel has hailed a "super result" in her speech and thanked her husband, known as the "Phantom of the Opera" due to the rarity of his public appearances, says Deborah Cole. However, Joachim Sauer, an academic chemist, is at CDU headquarters tonight for the celebrations.
• 1652 GMT: MERKEL PROMISES 'FOUR MORE GOOD YEARS' FOR GERMANY IN FIRST POST-POLL REACTION
• 1650 GMT: The Greens seem to have won around eight percent of the vote, a disappointing result for a party which the SPD had favoured as a possible coalition partner.
• 1642 GMT: Merkel is only the third leader to win a third term in Germany, following Helmut Kohl -- her mentor and the father of German reunification -- and Konrad Adenauer, who led West Germany post-World War Two from 1949.
• If she serves through to 2017, she will become Europe's longest-serving female leader, deposing Britain's late Margaret Thatcher.
• 1636 GMT: "Far left Die Linke, with roots in East Germany communism, now 3rd strongest party in German parliament, 23 years after reunification," tweets Deborah Cole.
• 1634 GMT: Another intriguing prospect would be if the anti-euro AfD manages to secure any parliamentary seats -- exit polls place them just short of the five percent needed. They have tapped into anger over German contributions to bailout packages for eurozone countries such as Greece.
• 1631 GMT: If the pro-business, liberal FDP are left without any seats in parliament as exit polls suggest, it will be the first time they have been shut out since 1949.
• 1625 GMT: "Triumph for Merkel, cliffhanger for FDP and AfD" is the headline on the website of leading German newspaper Süddeutsche Zeitung.
• 1623 GMT: "Up seven points on an increased turnout -- even if she loses the FDP, Merkel has given a lesson to the rest of Europe," tweets Frédéric Happe.
• 1617 GMT: AFP's Deborah Cole tweets: "Most recent public television info says anti-euro AfD at 4.9 percent -- they cld still clear threshold to seats".
• 1615 GMT: The exit polls from ARD and ZDF public television give Merkel's CDU at least 42 percent, the Social Democrats about 26 percent and the Free Democrats just below the five percent needed to re-enter parliament.
• 1609 GMT: AFP's Frédéric Happe (@FredHappe on Twitter) in Berlin says the alternatives to a Grand Coalition just don't stack up. "SPD+Greens+Linke undoubtedly not enough and barely credible, CDU+Greens also," he writes.
• 1603 GMT: MERKEL'S CURRENT COALITION PARTNERS FDP FAIL TO WIN SEATS, EXIT POLLS SAY
• 1602 GMT: EXIT POLLS INDICATE MERKEL'S CDU WINS CLEAR VICTORY, GRAND COALITION LIKELY