Exit Polls Too Close To Call, Traffic Light Looks Most Likely

With the exit polls in and the vote count underway after the polling booths in Germany closed, the race is deemed too close to call.

• It would seem that the CDU-CSU coalition has fared a touch better than was projected in the opinion polls heading into the federal election, but it is the centre-left SPD that seems to have garnered the most support. The exit polls have the SPD on 25-26% of the vote, while the CDU-CSU coalition is expected to receive 24-25% of the vote. This has resulted in SPD leader Olaf Scholz claiming a mandate to form a coalition government. CDU Leader Laschet has pointed to an unclear election outcome and outlined his desire to become the next Chancellor.
• This means that the most likely outcome of the coalition formation process is a 'traffic light' coalition, formed by the SPD, the environmentalist Greens, and the pro-business liberal Free Democrats (FDP). The slightly less likely option is a 'Jamaica' coalition involving the CDU-CSU, Greens, and FDP. The leaders of the FDP and Greens have noted that they should conduct bilateral (kingmaker) discussions, with the aim of outlining their preferred coalition partner when the talks conclude. Expect trilateral conversations surrounding the 'traffic light' and 'Jamaica' coalitions to run around such discussions.
• The potential of a majority three-party leftist government comprising of the SPD, Greens, and far-left Die Linke, has been nullified. This coalition would have seen the greatest alteration in policy terms, resulting in tighter housing & labour market regulations, as well as a closer relationship with Russia.
• Looking ahead, party leaders from across the spectrum have expressed the need for decisive action when it comes to the formation of a government, with some suggesting one needs to be formed before Christmas. As a reminder, it took around 6 months to form a government in the wake of the previous federal election.