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Merkel loses a leg of the election, but the race is far from over

Chancellor Angela Merkel has been the dominating presence in Germany over the past few years and the most instrumental representative of the nation in its international dealings.

Although the odds of Merkel continuing as Chancellor for a third term (following the federal election taking place later this year) are high, recent results have demonstrated that her economic policies have fallen short in the eyes of some, leaving her victory by no means assured.

The Christian Democrats, to which Merkel belongs, believed they would experience an 11th hour victory in Lower Saxony’s regional election, but it simply didn’t happen.

In the industrially and agriculturally important region the party lost out to the centre-left Social Democrats and Greens – who now have the power to instigate changes to the law and block legislation pushed forward by Merkel’s government if they disapprove it.

United, the SPD and Greens achieved one more state assembly seat then their centre-right rivals. As narrow as their victory may have been it was a victory nonetheless, and as it gave the centre-left the majority in the German parliament’s upper house the news is bound to come as a body blow to the usually unflappable Merkel.

This latest defeat follows SPD/Greens victories in five other states since 2010, including North Rhine-Westphalia and Baden-Wuerttemberg.

An ally of Merkel’s stated: ‘I assume it won’t be possible to push anything through the Bundesrat [upper house of parliament] that the SPD doesn’t want.’

But after seeing Merkel’s determination when it comes to approaching the serious issues I think it’s safe to say she isn’t about to give up without a fight.

This result could encourage Merkel to rethink her position on a number of concerns which have caused controversy within Germany in recent months, particularly her strategy for coping with the Eurozone crisis.

In recent weeks a string of data releases for the largest economy in the 17-nation currency bloc have disappointed, highlighting cracks in Germany’s foundations caused largely by the Eurozone’s fiscal woes. Merkel will no doubt be hoping for more positive results when it comes to this week’s German economic sentiment/current situation surveys and Thursday’s PMI figures.

As of 11:30 am

The Pound to Euro exchange rate is currently trading at 1.1929        

The Pound to US Dollar exchange rate is currently trading at 1.5876

The Pound to Australian Dollar exchange rate is currently trading at 1.5094

The Euro to US Dollar exchange rate is currently trading at 1.3304

The Euro to Pound exchange rate is currently trading at 0.8380

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