There is little doubt that Germany leads the EU and has for years. As the German economy goes, so goes the economy of Europe as a whole. For the better part of a decade the leadership in Germany has been provided by Angela Merkel and her political party (Christian Democratic Union). She has stepped down as leader of the CDU and her term as German Chancellor ends this year. Who steps into her place?
It was not all that many months ago that it was assumed the CDU would simply anoint a successor to Merkel and continue life as everyone knew it. That is no longer the assumption. Merkel pushed her choice to the front but Annegret Kramp-Karrenbauer was not able to unite the factions of the CDU and her bid to succeed was scotched. Next came a bruising contest between three diverse candidates from within the CDU – Friedrich Merz was the conservative and a critic of Merkel, Norbert Rottgen was the internationalist and Armin Laschet was the one closest to Merkel in policy. Laschet won the vote to run the CDU but he has not been popular with German voters and this has cost defections in terms of voter support. The public likes Markus Soder of the Bavarian Christian Social Union—the sister party to the CDU. The decision by the CDU to back Laschet anyway has led to a very unusual situation.
Enter the Green Party. They have now been elevated to the position of “kingmaker”. The CDU/CSU will fall short of the numbers needed to form a government and need a coalition partner. There is no alternative other than the Greens as they are now getting 20% support from voters. They have put their leader up as a candidate for Chancellor. It is essentially a matter of picking Annalena Baerbock to lead the country if the Greens are to be a coalition partner. She is the pragmatic half of the Green’s co-leadership but she still stands for the key positions taken by the Greens.
So, what does all this mean for German manufacturing and manufacturing in general? The focus of Green policy is energy and climate change. It will mean an aggressive attempt to reduce carbon emissions and that means tighter regulation regarding air quality and it means pressure on the energy sector to switch to renewable sources. There would doubtless be a combination of regulations and incentives to move industry towards wind, solar and other alternatives.