Yesterday morning (6 May) in Berlin, CDU leader Friedrich Merz (Christian conservatives) experienced a humiliating defeat when the Bundestag (Parliament) narrowly rejected his proposed coalition government with SPD (Social Democrats). The two parties hold 328 seats, i.e. more than the 316 needed for an absolute majority. Yet only 310 voted in favour of the new cabinet based on a coalition agreed between Merz and Lars Klingbeil from SPD following the parliament elections on 23 February.

The anonymous vote result suggests that all MPs from other political parties voted against it, as did some from the coalition partners.

The biggest opposition party, AfD (far-right), used the occasion to attack Merz and called for new parliamentary elections. Eventually, AfD agreed to hold a second ballot in the afternoon, in which the Merz cabinet was endorsed by 325 votes.

The initial defeat represented a blow to Merz’ prestige at a time when many Europeans are hoping Berlin might take a leading role in boosting Europe’s economy and in uniting the continent in support of Ukraine, and against an increasingly hostile US administration.

Since WW2, the procedure for government appointment in Germany is one in which the leader of the party winning the highest number of seats in the parliament is tasked with composing a cabinet-designate that will be presented for the Bundestag to approve. Most often he/she will probe and negotiate with one or several other parties to form a coalition or at least secure the support necessary for the parliament’s majority to actively endorse. Yesterday’s first attempt defeat was the first time such a majority failed to materialise.

After being sworn in at the Presidential palace today, Merz will travel to meet French President Macron in Paris, and Polish PM Donald Tusk in Warsaw.

German and European stock prices fell following the failed vote but had recovered most of the loss by the end of yesterday’s trading session. EUAs closed Tuesday at EUR 69.27/t, up EUR 1.80 day-on-day.