Despite the news last week that a new coalition is likely, some German states could have other ideas
Last week, the SDP leader, Martin Schultz announced that he would back a deal to form a Grand coalition. this was yet another supporting factor for the euro last week. However, things aren’t looking so clear cut after regional SDP members fought against forming a new coalition over the weekend. In Saxony, the deal was voted down 52-51 at a party conference, and there are similar calls being made from the SDP members in the largest German state, North Rhine Westphalia.
The SDP lost a fair number of votes over the elections and there looks to be some big divisions within the party which could make it difficult for leader Schultz to get the coalition deal put through.
The euro is pretty much ignoring the news but if we hear of further push-backs against the deal, that’s going to grab the market’s attention.