Tomasz Wieladek and Iaroslav Shelepko at....>

GERMANY: Tomasz Wieladek and Iaroslav Shelepko at Barclays note that the German

SPD party delegates voted in favour of 'Grand Coalition' talks but only by a

narrow margin of 56.4%. "Given the low delegate approval rate on Sunday, whether

or not the SPD party membership will approve the Grand Coalition remains

uncertain."

- Barclays note that at the same stage of Grand Coalition talks in 2013, 86% of

delegates voted in favour of talks but a lower 76% of voting party members

wanted to go ahead. Wieladek and Shelepko write, "This is clearly just one

observation, but if the approval rate was 10% lower among members, like in 2013,

then the final Grand Coalition treaty would be rejected." However, Barclays'

base case is that the Grand coalition will be created but that formal

discussions will require difficult trade-offs by all parties.

- Barclays conclude, "We believe that the polling of the SPD party membership

will likely be concluded by the middle of March with a new government sworn in

soon thereafter."