Important Links

Germany Election Aftermath: What Now?

10 October 2017PoliticsEconomicsEurope

By Citi Analysts

  • All eyes are now on the German coalition negotiations. The elections on 24 September saw Angela Merkel set for a fourth term as German chancellor although there was a sharp fall in support for her Christian Democrat-led alliance. For the first time in German post-war history, a three-party coalition is expected.
  • Citi's base case expects a "Jamaica coalition", a term in German politics that describes an alliance among the parties of the Christian Democratic Union/Christian Social Union (CDU/CSU), Free Democratic Party (FDP), and the Green Party.


  • Tax cuts likely to be delayed: Lengthy coalition talks and the political calendar look set to postpone income tax cuts of €15bn (0.5% of GDP) from 2018 to 2019.
  • Eurozone at risk? The FDP's Eurozone policy proposals could pose a risk to Eurozone financial stability and rekindle Grexit fears. However, Citi analysts doubt that this pro-EU party would put Germany's relations with France and the rest of Europe at risk.
  • Sectors that could potentially benefit/suffer: On the positive side, the FDP's ideas to improve the environment for start-ups, venture capitalists and private equity could benefit these as well as those they typically invest in, such as tech-firms. Fewer restrictions on temporary work could benefit labor-intensive industries such as logistics or hospitality?. Service sector deregulation may benefit retail trade and pharmacies. More investment in education should boost those in the private sector connected to that. On the negative side, some of the Greens policies such as phasing out fossil energy generation by 2030 (which may hurt energy utilities) or phasing out combustion car engines by 2030 (which would hurt car manufacturers) may be adopted as well. Fewer energy tax exceptions for large users could affect energy-intensive industries such as metal producing, while the FDP's Eurozone ideas could endanger financial stability and thus banks.

Our recent research

Heading Towards Rising US-EU Trade Tensions?

The US Trade Representative (USTR) is expected to implement tariffs on US$7.5bn worth of EU products starting on October 18, following the World Trade Organization’s (WTO) ruling in favour of US.

Find out more


US: Recent Weak Data a Cause for Concern?

Unexpectedly weak ISM non-manufacturing and ISM manufacturing data makes a further Federal Reserve cut likely this year. However, despite increased downside risk, Citi’s base case remains for GDP growth to continue around 2% for the remainder of 2019 and into 2020.

Find out more


Looking Past the Political Noise

Citi analysts believe the mild negative response to recent events – Trump impeachment inquiry and UK's supreme court declaring parliament suspension as unlawful – is revealing of how markets have braced for bad news.

Find out more

EconomicsPoliticsAsset Allocation

Take the first steps to your wealth management planning with Citi

Speak to a Relationship Manager
0207 500 1992

Already with Citi? Contact your relationship manager or view product availability on Citi Online

Why choose Citi

A relationship - not just a bank account

A dedicated Relationship Manager giving you access to our internal team of product experts and all our benefits

Access to exclusive Citi products

A range of current and investment products available both on shore and offshore, in the currency of your choice
Multi-currency accounts
Investment products

Global services for a global lifestyle

Our team is here to support you getting started in UK or with International travel and relocation
Moving to and from the UK
Travelling overseas

Offshore investments

We offer a diverse range of banking and investment services, including for those who want access to offshore investments

Find out more

Just moved to the UK?

We can save you time money and hassle. If you are a foreign national in the UK, Citi's International Banking Service can help you manage your money, home and away.

Find out more

Investment products are not insured by any governmental agencies, are not bank deposits, and are neither obligations of, nor guaranteed by, Citigroup, or any of its affiliates, unless otherwise stated. Investment products are subject to investment risks, including possible loss of some or all of the principal amount invested. Past performance is not indicative of future results, investments can go down as well as up.

“Citi analysts” refers to investment professionals within Citi Research (“CR”), Citi Global Markets Inc. (“CGMI”) and voting members of the Citi Global Investment Committee. Citibank N.A. and its affiliates / subsidiaries provide no independent research or analysis in the substance or preparation of this document. The information on this page has been obtained from reports issued by CGMI. Such information is based on sources CGMI believes to be reliable. CGMI, however, does not guarantee its accuracy and it may be incomplete or condensed. All opinions and estimates constitute CGMI’s judgment as of the date of this page and are subject to change without notice. This page is for general information purposes only and is not intended as a recommendation or an offer or solicitation for the purchase or sale of any security or currency. No part of this page may be reproduced in any manner without the written consent of Citibank N.A. Information on this page has been prepared without taking account of the objectives, financial situation, or needs of any particular investor. Any person considering an investment should consider the appropriateness of the investment having regard to their objectives, financial situation, or needs, and should seek independent advice on the suitability or otherwise of a particular investment. Citi Research (CR) is a division of Citigroup Global Markets Inc. (the "Firm"), which does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the Firm may have a conflict of interest that could affect the objectivity of this information. Investors should consider this information as only a single factor in making their investment decision.

Opinions expressed herein may differ from the opinions expressed by other businesses or affiliates of Citigroup, Inc., and are not intended to be a forecast of future events, a guarantee of future results or investment advice, and are subject to change based on market and other conditions.