What Just Happened!? Angela Merkel announces end of chancellorship

You might have received the news alert in recent days that Angela Merkel has announced she will step down as Chancellor of Germany in 2021. What just happened? Or should we rather say “Was ist passiert?”

Germany is currently governed by a coalition of the centre conservative CDU – Angela Merkel’s party –, its Bavarian sister party, the CSU, and the centre-left wing SPD. These governing parties experienced heavy losses in the important state elections in Bavaria three weeks ago as well as in Hesse (the home of financial centre Frankfurt) seven days ago. This is largely interpreted as a vote of no confidence for the work of the national government under Angela Merkel and it puts the top brass of all three governing parties under immense pressure to end their collaboration in government.

What does this mean for Germany and for the tech sector?

Angela Merkel announced on Monday that she will not run for Chancellor of Germany again in the next regular national elections of 2021. She is also not going to be competing for the post of chairman of her party in December anymore. As a wider consequence, three scenarios are easily conceivable of what could happen in the coming weeks and months:

1. Angela Merkel and her coalition stay in power:

This outcome would see a weakened Angela Merkel, and far greater influence from coalition partners and challengers within her own party. While the CSU’s pet project is its paranoid relationship to the refugee crisis and immigration policy, the SPD has already issued a catalogue of demands for the next 12 months, focussing on childcare, labour market reforms, house rental policies and climate change regulation.

Major reforms in the tech space would probably move very far down the agenda. However, the good news is that Brexit talks in Brussels would not be complicated any further by a German election campaign or long coalition negotiations in Berlin.

2. A new coalition in the current parliament:

Mathematically, a new coalition between Angela Merkel’s CDU (plus CSU), the green buy soma online in usa party and the liberal-democrats (FDP) is feasible – but it is not a realistic option under Angela Merkel. However, one of her adversaries from her own party could take it upon themselves to make a new attempt at forming a government, if the existing coalition collapsed under the current pressure.

For tech companies, it will be interesting to know that the FDP as well as the greens both put a heavy focus on creating a digital society, including the necessary investments in Germany’s digital infrastructure. At the same time, the issue of data protection is very high on the agenda for both parties.

The FDP as well as the greens are also looking to facilitate access to high-risk capital investments for young German companies through new Venture-Capital rules (something that other parties are getting on board with as well). At the same time, parties like the FDP are trying to regulate and reduce the power of digital giants through new competition rules (the FDP’s prime example is the acquisition of WhatsApp by Facebook, which, in their eyes, should never have made it past the competition authorities).

3. Re-elections

Many people think that new elections without Angela Merkel before 2021 are a likely scenario. Another devastating loss for the governing parties in the European Parliament elections in May 2019 could, for example, be the catalyst.

Funnily enough, the likely outcome of this would be a coalition between CDU/CSU and FDP and greens as described above in scenario 2.

There is good news for the UK in this scenario as well: as it looks now, May 2019 would be a likely time to announce re-elections. This would mean the Brexit talks in Brussels would not be complicated further by renewed coalition talks, at least in the next few weeks.

We will be discussing the impact of Brexit on UK tech companies at our BIMA Brexit Breakfast Briefing on Tuesday, 6 November. Sign up here or get in touch with us if you are interested in attending!