- Both SPD leader and current Finance Minister Olaf Scholz and CDU-CSU candidate Armin Laschet will seek alliances, with another coalition between the parties looking improbable.
- A weak showing for the left-wing Die-Linke party, which is projected to have secured less than 5% of the vote, has eliminated the possibility of a coalition that would lurch the country's economic policy to the left.
- This development has reassured business leaders both in Germany and abroad.
German business leaders have voiced relief after the country's federal election results quashed the possibility of the next government having a strong left-leaning slant.
Preliminary results on Monday indicated that the center-left Social Democratic Party had gained the largest share of the vote, edging out current Chancellor Angela Merkel's right-leaning bloc of the Christian Democratic Union and Christian Social Union.
The Green Party and the liberal Free Democratic Party are projected to have gained 14.8% and 11.5% of the vote, respectively, effectively rendering them kingmakers with all eyes now on what promises to be a prolonged period of coalition negotiations.
Both SPD leader and current Finance Minister Olaf Scholz and CDU-CSU candidate Armin Laschet will seek alliances, with another coalition between the parties looking improbable.
A weak showing for the left-wing Die-Linke party, which is projected to have secured less than 5% of the vote, has eliminated the possibility of a coalition that would lurch the country's economic policy to the left.
This development has reassured business leaders both in Germany and abroad.
Taxes not 'what keeps German business up at night'
Joe Kaeser, chairman of Siemens Energy and former CEO of Siemens, said the Green Party's success and influence on the campaigning stances of various parties would bode well for the German economy, particularly its high profile energy transition efforts.
He suggested that as green policies became integral across the campaign platforms, the party's profile may have been "diluted" somewhat.
"If you look at how everything has developed, the Greens have been the first ones to talk about a sustainable social market economy," Kaeser told CNBC on Monday.
"Remember the recipe in Germany, the social market economy, has always been a good thing to target and to fulfil, and the Greens have added this sustainability matter to the other two, which I thought was a smart idea, and then during the course of the campaigning, everybody became sort of Green."
Kaeser said the current government should focus on linking up existing renewable energy production at a faster pace, and suggested that market concerns about corporate tax hikes in the event of an SDP-led coalition were overblown.
"Companies go where demand is, where they find good people and where their most decisive production factors are relevant," he said. "Most of the companies here depend on energy. Even the car industry, which needs to reduce a lot of CO2 emissions, is dependent on getting sustainable, affordable and reliable energy."
The former Siemens boss argued that the sustainable social market economy formula would be important in dealing with the digitization and automation of the economy, bringing together education, energy and the country's economic engine room — exports.
"Bringing those three together is really a strong aspiration, and that will decide the future of Germany, whether we can sustain our wealth and our competitiveness or not."
Taxes, climate and energy
Simone Menne, president of the American Chambers of Commerce in Germany said the prospect of an SPD-led coalition would be good for transatlantic relations.
Menne told CNBC on Monday that she agreed with U.S. President Joe Biden that the SPD was a "solid party" and that a coalition led by either the SPD or the CDU-CSU bloc would reinforce the relationship between Washington and Berlin.
"We are quite happy with the result but the point is it's a very tight result, and it's very important that we are fast and they are fast with the negotiations, because we need to make important decisions and Germany has to go forward and not stop because of months of negotiations," Menne said.
She highlighted that the Chambers' members had complained of delays to digital infrastructure development in Germany, a problem that any new administration would need to address. Tax policy was also high on the organization's agenda, and Menne suggested it would be key to ensuring strong economic ties between Germany and both the rest of Europe and the U.S.
"Germany is very high in taxes for companies so that is something they should consider and that may be an interesting point with the Social Democrats, and their relationship with Europe and the transatlantic relationship."
She also urged the new administration to prioritize a coalition for climate protection and the energy transition, a call echoed by Kerstin Andreae, president of Germany's BDEW organization representing the energy and water industries, in comments made to Deutsche Welle.
Focus for markets will now turn to the pace of negotiations in the hope of mapping a clear economic policy direction for Europe's largest economy.
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