But surprisingly, the impact on the German economy is non-existent so far.
Last month, we saw the German business morale hitting another record high in November, with the IFO Institute adding that the economy is “headed for a boom.” Just last week, data confirmed that the German economy grew by 0.8 percent in the third quarter, which led to the IFO Institute upgrading its growth forecast for the German economy to 2.3 percent this year, from 1.9 percent previously.
Talking to me on CNBC, Clemens Fuest, the president of Munich-based IFO Institute, said that only a period of prolonged uncertainty brought about by new elections early next year might impact business sentiment, adding that “we are very far away from that scenario.” Even a minority government might work as this would “revitalize parliamentary debate,” he added.
In fact, when I asked Hans Redeker, head of foreign exchange strategy at Morgan Stanley, about a slowdown in investment in growth as a result of the collapse in coalition talks, he said: “When things are going well in the economy, you don’t necessarily need strong leadership – it is only when the economy isn’t doing well that you need leadership”.
So far so good – few people seem to be concerned about the economic impact due to the German mess that we are finding ourselves in. But there are those who still won’t sleep easy – Brexiteers and Macronistas.
