What if Olaf Scholz was the next German Chancellor

The political uncertainty is as high as it could be, but policy continuity remains the central scenario

For the past few months, I have argued that the German elections might lead to important political changes domestically but may not lead to big policy changes in Germany and in Europe. I continue to believe that this is the central case, even though the evolution of the polls in recent weeks have shown important changes.

·      The Greens have failed to capture the imagination of the German electorate and to capitalise on a summer where environmental catastrophes in Germany and globally should have provided a major boost. They have lost the momentum.

·      The CDU has failed to stand proudly in the shoes of Merkel and own her legacy. Armin Laschet has not been able to prove to the German public that he was a true statesman.

·      Olaf Scholz personally, rather than the SPD, seems to have been able to embody the best possible succession of Merkel. A campaign steeped in continuity rather than change has given Scholz an advantage that appeared unachievable a few months ago.

There will now be three televised debates before the elections that are critical to crystallise the ongoing dynamics. Scholz can well use these appearances to present himself as a more credible Chancellor than both Laschet and Baerbock, whom he can paint respectively as provincial and inexperienced. If he succeeds, while he nearly missed the nomination of his party, he will have achieved an incredible remontada and would stand a chance of becoming Germany’s next Chancellor.

That being said, even if Scholz manages to lift the SPD a touch above the CDU. The coalition negotiations will be difficult, certainly long and the name of the Chancellor potentially unknown for a while. Indeed, there is no obvious configuration.

·      In all likelihood, the SPD/CDU coalition will not have the majority to be extended for another term.

·      The “Kenya” coalition: CDU + SPD + Greens has not been discussed much but could be an option, especially if the FDP sets unreasonable demands. It would command a broad majority in excess of 62%.

·      The “Jamaica”: CDU + Green + FDP coalition would have a majority of around 55%.

·      The “Traffic light” coalition: SPD + Greens + FDP would have a slimmer majority just above 50%

·      A “grand grand coalition” including all parties except the AfD would have an overwhelming majority but would place the AfD and Die Linke in the position of only opposition at the Federal level, which would be a real risk for the future.

Given the potential coalitions, the FDP with a modest score of around 12% could therefore not only be the kingmaker but also play a critical role in enabling a given coalition and shape some critical aspects of a future coalition agreement. This is a source of concern because back in 2017, the FDP had negotiated hard specifically against any ambitious European agenda.  

The single biggest risk in the coming negotiations might therefore be not only that the FDP secures important concessions on economic policy or the European agenda but even that it tries to lock them in by demanding the Finance Ministry, which Christian Lindner has openly said he would want.

All in all, while the come-back of the SPD is an important signal nationally and across Europe that old parties do not die easily into the night, it does not signal a significant policy shift. In fact, it is precisely because Scholz has successfully and consistently positioned himself as the best heir to Merkel that he stands a chance of becoming Germany’s next chancellor. The political uncertainty in Germany is probably as high as it could be a few weeks away from the elections, but the degree of political consensus is such that policy uncertainty remains limited. The greatest danger is stasis: long coalition negotiations and a new government schackled by a restrictive coalition agreement.