Germany: A difficult victory

The CDU/CSU has won the German election, putting Friedrich Merz on track to become the country’s next chancellor. However, despite securing a victory, Merz has little to celebrate, as the political landscape remains challenging. While there is scope for easier fiscal policy, a true ‘fiscal Zeitenwende’ is not expected. The German economy has started the year on a slightly better note, though it’s far from booming, with significant concerns and headwinds still looming. Regardless of the coalition talks’ outcome, the energy market landscape is unlikely to change much.