Government Parties Suffer Setbacks In Hesse & Bavaria Elections

The three parties forming the federal governing coalition - Chancellor Olaf Scholz's centre-left Social Democrats (SPD), the environmentalist Greens, and the pro-business liberal Free Democrats (FDP) - all sufferedpoor resultsin the state elections held in Hesse and Bavaria on 8 October. While these were only state elections the results - which saw strong gains for parties on the right - will be seen as a rebuke to the Scholz gov't amid public concerns about the economy and rising immigration.

• While the federal gov't commands a comfortable majority in the Bundestag, there are likely to be concerns among the governing parties - notably the FDP - that its continued participation in gov't risks an electoral wipeout come the next federal election in 2025.
• A low-probability, high-impact scenario would see the FDP withdraw its support from the federal coalition. This would either require a reconfiguration of the gov't, the continuation of a vulnerable minority administration, or snap elections called.