Carsten Brzeski, Chief Economist at ING, suggests that something’s brewing in Germany and although economically still the strong man of Europe and the Eurozone, the refugee crisis has shaken up German politics.
Key Quotes
“Next week’s regional elections will be an important test case for Chancellor Merkel and her stance on the refugee crisis.
Political popularity is almost as volatile as the financial markets. Last year, Angela Merkel was still the unofficial Queen of Europe and the official “Person of the Year” of Time Magazine. Just a couple of months later, she is still the Queen of Europe (even though with crumbling allegiance), but her popularity in Germany has taken a hit. While she had been Germany’s most popular politician for several years in a row, she currently has problems staying in the top three.
Since the warm welcomes and substantial humanitarian aid for the refugees last Summer, many Germans have become worried that the inflow of refugees is overburdening the economy and society. Chancellor Merkel’s position has always been that Germany can cope with this inflow. Her “we can do it” is already legendary.
Unfortunately, she seems to be facing difficulties convincing European partners and German voters that they really can. Europe is still struggling to come up with a common approach on refugees and migration, external borders, financial aid, inner-European reallocations and asylum rights. Next Monday’s emergency summit will be another attempt to fix the situation.”
(Market News Provided by FXstreet)