CDU battle between Soeder and Laschet before the election

LONDON – It would never be easy to find a successor to Angela Merkel, the German chancellor for the past 16 years. But the race only got more complicated, with two competitors contesting the Conservative ticket.

The obvious Conservative candidate in the upcoming German election would be Armin Laschet, head of the state of North Rhine-Westphalia. He was elected leader of Merkel’s CDU party in January and claims he wants to modernize Germany.

That was until Markus Soeder, of the Bavarian sister party, the CSU, threw his hat into the ring. Soeder is probably the most popular man in German politics.

“It has always been clear that the race after Angela Merkel’s succession will be long and will not follow a straight line. It may not be a great film, but rather a valuable political series,” said Carsten Brzeski. chief economist of ING, said. Germany, said in a note on Tuesday.

As far as federal elections are concerned, the CDU and CSU are acting together – and will therefore only present one candidate.

CDU lawmakers will discuss who it should be on Tuesday and hope to reach a decision this week. But it will be a difficult choice between their party leader and someone as popular as Soeder.

Elisabeth Motschmann, a lawmaker from the CDU, told CNBC’s Squawk Box Europe on Tuesday that she supports Soeder.

“For this very hard work, I think Markus Soeder will do his best and be able to win,” she said. “I do not think it (Laschet) will be difficult enough and he can not decide like Soeder.”

Jens Suedekum, professor at the Dusseldorf Institute for Competitive Economics, told CNBC in an email that “what characterizes Soeder is its unique degree of flexibility, you can call it opportunism when it comes to political principles.”

The Conservative party of Germany has been declining in popularity since January when the coronavirus pandemic began to worsen in the country.

It was eventually set up to harmonize lock-in rules in an effort to contain a third wave of business. This comes after the population expressed frustration over how the rules have differed from region to region since the initial outbreak of the Covid-19.

But things can be looking up to the conservatives.

“Once the CDU / CSU’s official election campaign is underway and vaccinations are underway, things will look better for them,” Naz Masraff, director of the consultancy firm Eurasia Group, said in a note on Tuesday.

However, she stressed that Laschet is likely to have a harder time consolidating the CDU / CSU’s voter base and winning back Green Party centrist voters.

“He will also have to work hard to change his image as a weak and unequivocal leader who did not take such a strong streak on the pandemic or corruption in the ranks of the party as many Germans expected,” Masraff said. added.

Whoever the CDU chooses to be its candidate could ultimately have an impact on the kind of coalition that emerges in September.

“Laschet’s candidacy will benefit the Greens and the Social Democrats. It will also increase the chances of a green chancellor after September’s election,” Masraff said.

The CDU / CSU is currently leading the polls, with about 27% of the vote; however, the Greens win by about 21% field. The party with the most votes will lead coalition negotiations after the election in September.

Christian Schulz, chief economist at Citi, told CNBC’s Squawk Box Europe on Tuesday that investors in the September election will reflect on what the new government could mean for fiscal policy in the eurozone.

He said both Conservative candidates ‘say very little about what they want to do’, but added: ‘Soeder gets more Eurosceptic instincts, so he will probably be the worst outcome for markets, at least in the short term.’

Yields on the German mortgage for ten years have risen since Soeder’s announcement Sunday, indicating concerns about political uncertainty.