German Exit Polls Are Out: Conservatives Win, Will Form Coalition Govt; AfD Comes In Light

Update: The German election exit polls are in, and the result is on light side for the AfD which were polling around 21%, but appear to have ended up with 19.5% of the vote, coming in short of a blocking position.

• *GERMAN CONSERVATIVES GET 29% IN ELECTION: ARD EXIT POLL
• *GERMAN AFD GETS 19.5% IN ELECTION: ARD EXIT POLL
• *GERMAN SOCIAL DEMOCRATS GET 16% IN ELECTION: ARD EXIT POLL
• *GERMAN GREENS GET 13.5% IN ELECTION: ARD EXIT POLL
• *GERMAN LEFT PARTY GETS 8.5% IN ELECTION: ARD EXIT POLL
• *GERMAN LIBERAL FDP GETS 4.9% IN ELECTION: ARD EXIT POLL
• *GERMAN FAR-LEFT BSW GETS 4.7% IN ELECTION: ARD EXIT POLL

And visually, the ARD exit poll:

And ZDF: here AfD just fractionally better at 20%, but still below the 21-22% they would poll last week.

Unlike previous elections which were anemic affairs, participation today was a whopping 84%, the highest since German reunification in 1990.

The emerging picture is one where the initial exit polls are in line with the most recent public polling, showing a CDU victory, with the SPD and Greens collapsing while the AFD doubles its support from 10% in 2021 and is set to become the main opposition power in the new government. Of note, and to get an indication of how unpopular legacy politics in Germany have become, the Social Democrat party of Chancellor Olaf Scholtz posted its worst result since World War 2.

• *GERMANY’S SCHOLZ: IT’S A BITTER ELECTION RESULT FOR THE SPD

In other words, Germany’s opposition conservatives won the national election on Sunday, putting leader Friedrich Merz on track to be the next chancellor…

• *CDU’S MERZ: WE HAVE WON THIS ELECTION
• *CDU’S MERZ: NEED A GOVT WITH A GOOD PARLIAMENTARY MAJORITY
• *MERZ WANTS TO FORM GERMAN GOVERNMENT AS SOON AS POSSIBLE

… while the populist Alternative for Germany came in second, its best ever result. Naturally, the SPD was not happy:

• *SPD’S MIERSCH: IT’S A HISTORICAL DEFEAT FOR SPD, BITTER EVENING
• *SPD’S MIERSCH: FRIEDRICH MERZ HAS THE MANDATE TO FORM A GOVT
• *SPD’S MIERSCH: BORIS PISTORIUS WILL PLAY IMPORTANT ROLE IN SPD

That said, with 29% of votes in exit polls, the CDU/CSU falls short of parliamentary majority needed to govern alone. However, it will likely be able to form a two-party governing coalition with the SPD.

Meanwhile, since the AfD – which has been shunned by every other party and will not participate in any strategic alliances with anyone – did not enjoy a last minute burst in support, and came in at or just below where the polls said would, it will come in short of having a blocking position in the new government, and as a result will not be able to prevent either the stimulus flood or the easing of the debt brake which so many had already priced in. Still, the AfD’s spirit was high:

• AFD’S WEIDEL: WILL OVERTAKE CDU AT NEXT ELECTION

Finally, the Greens – which came in at 13.5% – have succeeded at minimizing their losses and remaining a significant player in the Bundestag, which was the goal their entire campaign was structured to achieve.

Despite his resounding victory, conservative leader Friedrich Merz was roundly criticized during the campaign for trying to push through hard-line immigration measures with the help of the far-right AfD, triggering mass demonstrations and even a rebuke from former Chancellor Angela Merkel (who was the former leader of the CDU/CSU).

According to Bloomberg, Merz consistently polls poorly with women and younger voters, and there seems little enthusiasm for him overall. But one fact speaks to his party’s success: asked which party they considered the most competent in three core policy areas — foreign and security; immigration; and the economy and finances — respondents to a Forsa poll taken for the RTL/ntv on the eve of the election, placed Merz’s party top in each field. Even on the AfD’s calling card issue of migration, Merz’s bloc stood well out in front, while on the economy, it led Scholz’s SPD by a whopping 42% to 12%.

* * *

We previously previewed tomorrow’s German election in an extensive article (see “Everything You Need To Know About The Upcoming German Election“) but with so much at stake, with Elon now going all in…

🇩🇪🇩🇪🇩🇪 AfD! 🇩🇪🇩🇪🇩🇪

— Elon Musk (@elonmusk) February 22, 2025

… and with the situation more fluid by the day…

… it’s time for a quick reassessment of where we stand (we summarize various reports from DB, Goldman and Bloomberg).

1. Executive Summary

Polls, coalition options and potential impact on policies

• Polls: The conservative CDU/CSU is leading the polls with 31 followed by the far right AfD at around 21 the Social Democrats at 15 and the Greens at 13%. A lot of attention will be on whether the three smaller parties (FDP, BSW, Left) make it into parliament
• Timeline: First projections based on exit polls after 6 pm CET on February 23 preliminary results from 6 30 pm CET on and then updated during the night/early morning
• Coalition formation: Coalition negotiations might take several weeks as they require some difficult compromises 

Coalition options

• Base case – two party grand coalition: Polls suggest that the Conservatives could form a coalition government with either the SPD or the Greens A CDU/CSU SPD coalition appears more likely as polls suggest it could achieve a more comfortable majority On defence/foreign policy, there are significant policy overlaps with the Greens
• Surprise – three party centrist coalition – “Kenya”(CDU/CSU-SPD-Greens) or “Germany”(CDU/CSU-SPD-FDP). On the one hand, a three party coalition could prove to be rather fractious and result in fraught policy compromises On the other hand, a “ coalition might increase the chance of a meaningful shift in fiscal policy if centrist parties kept the two thirds majority 

What’s are the risks?

• Downside risk – blocking minority of fringe parties (AfD & BSW): This would imply that constitutional change for setting up an off budget defense/infrastructure fund/debt brake reform is contingent on concessions to the fringe parties or not possible at all
• Absolute tail risk – AfD as part of the government: Extremely high bar to be crossed all parties credibly rule out that option ex ante

Potential impact on policies

• Fiscal policy pivot towards higher spending – The perceived erosion of Europe’s security architecture makes it likely for the new government to swiftly agree on funding higher defence spending outside the debt brake. The fiscal impulse could be material However, the short term growth multiplier should not be overestimated, with the bulk of military procurement going abroad Debt brake reform for the Länder might provide additional and more immediate fiscal stimulus from 2026 onwards
• Compromises on structural reforms – A CDU/CSU led coalition could potentially agree on a step by step reduction of the corporate tax burden, streamlined administrative processes, and measures to lower electricity prices, but no major pension reform 

How much of the election is already factored into our forecasts?

• For 2025, Deutsche Bank expects the economy to grow by 0.5%. The bank’s 2026 forecast is predicated on a meaningful probability that the next government relaxes the constitution debt brake to allow more debt financed investment. Without it, the status quo would imply structural stagnation

2. Backround

• A deeply divided coalition government in Berlin has failed to take the hard decisions needed to turn Germany’s economy around. The snap election on Feb 23. is therefore a chance for voters to deliver a stronger government capable of tackling the country’s pressing problems.
• The main danger is that the poll yields another fragmented parliament. This could leave a power vacuum at the heart of Europe during a particularly challenging time and, eventually, result in a government that is too weak to implement much-needed reform. Furthermore, much of the proposed fiscal stimulus emanating out of Germany has already been priced into European stocks, so a “tail” outcome tomorrow could have a major adverse impact on European markets.
• The greater the number of parties that enter parliament, the higher the risk that the center-right Christian Democratic Union (CDU)/Christian Social Union (CSU) alliance and the Social Democratic Party (SPD) have too few seats to form a grand coalition.
• Policy uncertainty is already through the roof in Germany and this is weighing on growth as companies delay investment decisions. The more time it takes to form a coalition, the greater the delay in kickstarting an economic recovery.
• The duration of coalition talks will also show how willing parties are to overcome their differences to tackle urgent issues such as structurally weak growth, a potential US-Russia deal on Ukraine and a transatlantic trade war.
• Polling stations will close on Sunday at 6:00 pm Berlin time. Sufficient clarity about the election results should emerge during the evening. The CDU/CSU alliance is set to win, according to opinion polls. The far-right Alternative for Germany (AfD) would have to close a 10-percentage-point gap to defeat the center-right parties.  
• Barring any surprises, CDU leader Friedrich Merz will become the next chancellor. However, the CDU/CSU alliance is unlikely to have enough seats to lead a cabinet on its own, which means it will have to form a coalition with other parties.
• Merz has repeatedly declared he will not cut a deal with the AfD. The Free Democratic Party (FDP) isn’t seen as a suitable partner, since it will probably not have enough seats to make a difference — it might even struggle to make it into the Bundestag (national parliament).
• The most obvious option for Merz is to form a coalition with either the SPD, the Greens, or both. The ideological distance between the Greens and the CDU on social issues such as migration remains large, which means it might be easier for him to cut a deal with the social democrats.
• Still, much will depend on the distribution of seats in parliament. The more parties enter the Bundestag, the higher the risk that the CDU/CSU and the SPD might not have enough seats to form a government by themselves.

3. Timeline:

Timeline for the Bundestag election 2025: What will happen from voting until government formation

4. Polls

Germany heading towards new leadership? Conservatives are leading the polls, while the right wing AfD and Left gained further support

Accuracy of polls seems reasonably good: Far right AfD seems not to be systematically underestimated in polls

What is driving voters’ decisions? State of the economy is more important for voters’ decisions than immigration

5. Electoral System

Germany‘s mixed electoral system demystified: Peculiarities of the voting system might have an impact on the election outcome

Postal voting has started two weeks ago: Increasingly popular option among German voters

6. Coalition Formation

Zooming in on coalition negotiations: Coalition agreement in spring might provide psychological boost to confidence

Preview of potential coalition options: Conservatives likely to lead the next government according to current polls

7. Policy Outcomes

CDU/CSU – SPD or CDU/CSU – Green coalition – agree to disagree? Where do ex ante policy stances differ?

Potential impact of CDU/CSU policies on the economy: More supply-side policies, but still fiscal hawkishness

Economic policy implications: Fiscal policy pivoting towards higher defence spending

The fiscal defence policy nexus: Smaller parties not necessarily standing in the way of constitutional reform

Constitutional majorities and fiscal regime change: The more fragmentation, the less likely a fiscal regime shift

Zeitenwende 2.0 moment in defence spending: Pivot towards higher defence spending early in the next parliamentary term

Fiscal regime change – a cheat sheet for potential options: Policy options, needed majorities and potential timelines

Germany’s stance on joint EU borrowing: How to fund the VdL 2.0 policy priorities

8. Economic Outlook

How much of the election outcome is already factored into DB’s forecasts? A meaningful relaxation of the debt brake is not part of the 2025 baseline forecasts

9. Much-Needed Reforms

• A stable coalition would also strengthen Germany’s ability to respond to a long list of pressing economic challenges and thus, support growth in the medium and long term. Germany has to improve its productivity and revive competitiveness while at the same time deal with the threat of high US tariffs and the requirement to boost defense spending.  
• What all these challenges have in common is that they will likely end up costing a lot of money. The good news is that, in principle, Germany would have the necessary fiscal leeway. According to our estimates, it could raise public investment spending by 1% of GDP in the coming years and the debt-to-GDP ratio would still fall until 2040 and settle below the 60% mark.
• One main thing to watch is whether the parties that favor a reform of the very strict national fiscal rule, the so-called debt brake, will have the necessary two-third majority in parliament to deliver the required constitutional revision. Conversely, a very fragmented parliament would undermine the ability of the centrist parties to revise the current borrowing limit.

10. Tail Risks

What’s in the tails? Surprises, downside and extreme tail risks

Scenarios for a blocking minority of the far right AfD: Would require significant shift of approval rates and no small party entering the Bundestag

11. Challenges to Forming a Government

• The country’s political fragmentation means that negotiations to form a coalition might not be straightforward. CDU’s Merz has shown during the campaign that he wants to move more to the right on migration.
• That’s further away from the SPD’s stance and in order to make any deal with Merz more palatable to its electorate, the social democrats will try to extract as much as possible (for instance on economic issues) during negotiations.
• Recent elections show coalition negotiations have taken a substantially long time to wrap up. However, the bleak economic situation and uncertain geopolitics might provide an incentive for parties to accelerate discussions. In fact, how long it takes to form a government will indicate how willing parties are to work together to deal with Germany’s impending challenges.
• A minority government or new elections would be the available options if coalition negotiations were to fail. However, parties would likely try to avoid a repeat poll given voters might punish them for failing to form a government.

12. Election of the Federal Chancellor: Usually just a formality

More in the full presentation available to pro subscribers.