Germany: Game is all about politics - BBH

Research Team at BBH, suggests that at the moment when it comes down to Germany, it is a question of politics; of will, not means. 

Key Quotes

“Given the decline of Merkel's popularity, one might tempted to give credence to speculation that she is considering offering a tax cut.  In some other countries, maybe, but seems unlikely in a country where there is one word for both guilt and debt.  Moreover, maybe it misreads German politics.  Merkel faces two challenges, and both are to her right. 

The most important is with the Bavarian CSU.  The strain between the two began over Merkel's acceptance of making efforts to keep Greece in EMU.  There were some domestic policy differences, like minimum wage, but Merkel's immigration policy was the poisoned chalice.  The CSU may run their own candidate as Chancellor if the egos are strong enough and if there was a reasonable chance of success.  The mandatory caveat is that Merkel's rivals have often underestimated her to their chagrin. 

Her other challenge is with the AfD.  Although the party has been wracked by internal discord and fissures, the AfD, has struck a responsive chord with its anti-immigration rhetoric.  Through a leadership change, it has morphed from an anti-EMU party to anti-immigrant.  It is likely to be an important force in next year's national elections.  It is possible that the AfD edges past the CDU in the weekend's Mecklenburg-Vorpommern state election, but in national polls, its support is around 12%. 

Merkel tacks to the right with a greater emphasis on law-and-order issues, but this does not seem sufficient to solidify her right flank.  These domestic challenges suggest that Merkel will have to take a hardline on European issues over the next year.”