Merkel to step down as CDU leader in dramatic move

Angela Merkel will not seek re-election as chair of Germany’s ruling CDU party, effectively standing down as leader of the Christian Democratic Union, a post she has held for 18 years, after a disastrous performance by her party in regional elections in the German state of Hesse on Sunday badly dented her authority, and followed an ultimatum by her junior coalition partner, the SPD which also suffered a devastating loss in latest elections.

According to Spiegel and Bild, Merkel, who has chaired the Christian Democratic Union (CDU) since 2000, was expected to compete again at the party congress in Hamburg in early December. however in what many are calling “the end of an era” during which her command of Germany put its stamp on Europe and beyond for more than a decade, on Monday morning she told senior party executives that she would not stand again.

Merkel is scheduled to speak to the media at 1 p.m. local time on Berlin.





The Chancellor will reportedly retire after the end of her current term in 2021, which will give the CDU time to groom a successor. Though she remains one of Germany’s most popular politicians, her fellow Christian Democrats have long been demanding that she clear a path for her successor. After leaving German politics, Merkel has reportedly said she won’t consider any EU-wide posts.

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As we reported on Sunday, the CDU won the election in Hesse, but its share of the vote fell by more than 11 points, while the junior partner in her governing grand coalition, the Social Democrats, also slumped. The party’s poor showing reignited calls for the SPD to quit the government.

While Merkel can assume she’ll have the support to remain chancellor, “she’s broken the game for her succession wide open” according to Bloomberg, although doing it in a dramatic fashion, a surprise, as she has here, may help throw her competitors off balance. That would help her hand-picked successor, CDU General Secretary Annegret Kramp-Karrenbauer. But others are waiting in the wings. Bild reports that Friedrich Merz, her main antagonist in the first years after she took over the CDU in 2000, has thrown his hat in the ring.

Other possible contenders include Health Minister Jens Spahn, who has publicly criticized her open-doors refugee policy and is championed by the CDU’s social conservatives and Ralph Brinkhaus, a fiscal hawk who unexpectedly ousted Merkel’s longtime parliamentary caucus leader. Others include two state premiers Armin Laschet and Daniel Guenther, who carry weight after recently leading the CDU to victory in regional elections.

However, as Bloomberg notes, the potential for change in Germany is hemmed in by the country’s constitution and relatively strong political center.

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“Even if Merkel were to be replaced and/or if a new government were to take power in Berlin, with or without new elections, it would not make a major difference once the dust has settled,” Holger Schmieding, chief economist at Berenberg, said in a note. “Any conceivable coalition in Berlin would still be dominated by the mainstream parties CDU/CSU, SPD, Greens and the smaller Liberals.”

The repercussions of her decision will resonate far and wide, not least in the U.K., where Brexit is the all-consuming topic. As Bloomberg notes, there might be dismay at the prospect of someone so influential disappearing from the scene.

She has the ability to tip the scales and she has taken a more conciliatory approach than say, France’s Macron. But if Merkel does stay on as chancellor, could this free her up to throw some caution to the wind and steer the ship safely without having to worry about burning political capital?

The news sent the Euro sliding to session lows, down as much as 0.3% to 1.1360 before staging a modest rebound. Meanwhile, Germany’s DAX30 has extended gains to more than 1% since the first media reports of Merkel not seeking to continue as CDU leader, largely on the back of the weaker euro.