GERMANY: Coalition Negotiations To Get Underway w/Focus On Bundestag Session

While there will be significant market focus on events in the Bundestag today, this afternoon at the HQ of the centre-right Christian Democratic Union (CDU) formal negotions will get underway with the centre-left Social Democrats (SPD) on forming a governing coalition. 

• Two-hundred and fifty-six politicians will form 16 working groups to discuss various areas of policy detail. Each working group is comprised of 16 individuals: seven from the SPD, six from the CDU and three from the CDU's Bavarian sister party, the Christian Social Union (CSU).
• The 11-page exploratory paper agreed upon by the leaders of the three parties form the basis of talks, with each group tasked with formulating more concrete policies from the broad aims of the document.
• Party leaders have set a short timeframe for the working groups to hold talks, with the 16 due to present their efforts within 10 days that will allow the finalisation of a coalition agreement.
• CDU leader Friedrich Merz is looking to be installed as chancellor by Easter (20 April), around 50 days since the 23 Feb election. This would represent a significant acceleration of the process compared to the 2023 election (171 days) and even after the 2021 election that also resulted in a CDU/CSU-SPD 'grand coalition' (73 days). 

Of course, the developments in the Bundestag over the coming days will have a major impact on the coalition talks. Whether the old parliament can pass the major fiscal loosening will have a significant impact on the incoming gov'ts spending capabilities.