Spiegel German coalition story isn’t quite the end of the road for forming a government

Spiegel story highlights another vote by SDP members against the coalition deal

Yesterday we noted the story that some members of the SDP party voted against the coalition deal in Saxony, and wrote;

“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.”

Well, this morning Spiegel is out saying that the Berlin SDP members have also voted against the deal. While that’s bad news in itself, it’s not the whole story as Brandenburg voted in favour of the deal. As mentioned yesterday, the real test will be what happens in the largest state of North Rhine Westphalia, which has the most SDP members.

SDP members across Germany

Despite reports yesterday that NRW was leaning against the vote, Spiegel has also noted that preliminary talks in NRW were pretty evenly split.

The euro has dumped on the headlines spouted that the deal is on the rocks but the reality is somewhat different. The deal does seem finely balanced and the NRW result could be the kicker. If they vote against the deal then we would be back at square one. While that will obviously be a negative factor for the euro, it will just mean that the parties will have to get back around the negotiating table.

I’m almost tempted to buy the euro on this but as I don’t know the timetable for the rest of the regional votes, I’m going to leave it alone for now.