The recent elections in Bavaria confirmed the erosion of support for the traditional parties: both the CSU and the SPD lost more than 10% compared to the previous elections, at 37.2% (CSU) and 9.7% (SPD). The Green party was the real winner, gaining 8.9% compared to 2013, while AfD entered the Landtag for the first time, with a result slightly below expectations. In our view, AfD underperforming its approval rating at the national level should not be seen as a sign of a reversing trend, but rather as a signal that the electorate is looking for an alternative, but is not ready to give its full-hearted support to the more extreme options. However, that time may come, if the influence of the Green party on the government proves negligible.
According to our surveys, German voters share the same frustrations as other European voters towards their country’s fiscal strategy: it is too myopic. Chancellor Merkel is likely to remain under pressure by the electorate, in our view, for as long as it keeps its fiscal stance very tight. Going forward, she can either support greater fiscal manoeuvring in favour of public investment, or lose power, quite simply. For the sake of European unity, the first appears more desirable.