Political risks impact on business sentiment and financial markets. In this regard, poll outcomes surprised observers several times during the last 12 months. Against this background, German politics seem like a haven of stability. This should not, however, mask the fact that while the German economy is currently in good health, the new government will nevertheless face several major challenges. Globalisation, the future of Europe, the new geopolitical situation, climate change and – last but not least – demographic shifts, which are becoming ever clearer – each of these issues requires a political response.
Deutsche Bank Research has launched a series of papers “Germany Monitor – Bundestag elections 2017” that aim to examine how the main political parties plan to address these and other important issues and analyse whether their proposed solutions are convincing. Of course, we do not aspire to provide a complete analysis of the election programmes.
The latest edition addresses the debate about a new security framework, examining the parties’ positions on the latest European defence initiatives and the calls to meet NATO's 2 percent spending target. Full compliance would probably overstretch the current budget and thus necessitate adjustments to medium-term fiscal planning.