Abstract

Significance Merkel's Christian Democratic Union (CDU) will once again govern in a grand coalition with the Social Democratic Party (SPD) and the CDU’s Bavarian sister party, the Christian Social Union (CSU). Impacts Regional elections in Hesse and Bavaria at the end of 2018 will be the first tests for the grand coalition. The AfD will continue to grow in the short term, but incompetence may restrict its growth potential. The Green Party could emerge as a viable left-of-centre alternative to the SPD. Merkel’s electoral mishap diminishes her standing in the EU and could embolden countries opposed to French-German reform efforts. Domestically, euro-area reform could be hindered if dissent spills over from the AfD into the more conservative ranks of the CDU/CSU.

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