On September 26, 2021, Germans will go to the polls to select a new host of representatives in the Bundestag. This election promises to set the stage for a new era in Germany following the announcement that Angela Merkel would retire as chancellor. The direction of the world’s fifth largest economy hinges on the will of the German people. In this report, we seek to forecast which parties will be part of the new government?
First, we need to review the six major parties in Germany.
The Union is a political alliance between two political parties the the Christian Democratic Union of Germany (CDU) and the Christian Social Union in Bavaria (CSU). This alliance has defined the political landscape of Germany for decades. They have been part of eight of the last ten government and are the majority party in the current government. A center-right party largely guided by Christian values of freedom, solidarity and justice, with commitments to the European Union and a market economy.
AfD (Alternative for Germany) is a right-wing party formed in 2013 in opposition to the policies of European Union. Their representatives frequently speak of the need to retain German cultural heritage and view actions taken by the EU to trample on their national sovereignty. AfD uses populist rhetoric to speak of how the “political class” has sold out regular Germans. They are currently the largest opposition party in the Bundestag with roughly 12% of the seats.
SPD (Social Democratic Party) is a historic social democratic party who are the minority partner in the current government with the Union. They are a center-left party focused on fairness, equity, and diversity. Members strongly support the European Union. SPD is frequently a part of the government, being a partner in five of the last six coalitions. They have partnered with the Greens twice as the government’s majority party and the Union three times as the minority party.
The Green Party is another center-left party similar to SPD with a focus on environmental policies. They believe in creating a more equal and environmental sustainable economic system. Currently polls show them in second amongst the six largest party. Historically, they have only been a part of two governments in the late-90s and early-00s with the SPD.
FDP (Free Democracy Party) is another center-right most closely aligned with the Union. FDP focuses on classical liberal principles of freedom and self-determination both socially and economically. They have been involved in one government with the Union in early-10s. In the 2013 election, after being part of the government, they did not gain enough support to hold seats in the Bundestag. The party recovered in the 2017 election to hold 10% of seats.
The Left is the most left-wing party of Germany. They believe that global capitalism works against the needs of the people and should be abolished. They believe it should be replaced by a democratic socialist model. The Left has never been a partner in a coalition. They had their best performance in the 2009 election, holding 12% of seats, but have since seen dwindling support.
We need to understand the dynamics of government formation in Germany. The table below shows the representation of each party after each election since reunification in 1990. The parties in the government are represented by a German flag background.
One obvious conclusion we can draw from this table is the preference for a two-party coalition. Every single government in this time period had only two parties that held a cumulative majority of the seats. A three-party government could be necessary if no two compatible parties hold a majority of seats.
There are a couple of possible coalitions that have been ruled out by their respective leaders. Recently, the FDP ruled out a coalition with the Greens (https://www.reuters.com/world/europe/german-liberal-fdp-rules-out-coalition-with-greens-after-election-bild-2021-06-20/). Given German news reports, it seems unlikely that any party would partner with the AfD (https://www.dw.com/en/cdu-csu-spd-afd-fdp-left-greens/a-38085900). We therefore pruned these coalitions from our decision model.
Analyzing this history gives us a sense of the ideal partnerships for each of the major parties. The Union preferred partner is the FDP and SPD prefers to form with the Green party. If neither of those combinations holds a majority, a majority partnership of two of the four centrist parties usually forms. This is shown through recent prevalence of Union — SPD coalitions.
In the event a three party coalition is necessary, the most probable combinations seem to be SPD — Green — Left, SPD — Union — Green, or SPD — Union — FDP. Given the recent polling data, it seems that this election could produce the first federal three-party government.
With this logic in mind, we rated the possible coalitions and defined a decision model that iterates through the following possible German coalitions and once a coalition has over 50% support, we return that one. This is the order.
To produce a forecast, we first fetched the aggregated polling data from numerous sources. We then fit an ARIMA model to the polling data for each of the parties. In the graphic below, we see the confidence interval of the fitted model for each party with an alpha value of 0.10. We are therefore 95% confident the final support for each party falls within their cone.
These models allow us to use a Monte Carlo simulation to predict the support for each party on election day. There is a rule that if a party gets less than 5% support, then they do not hold seats in the Bundestag. Thus, if a party did not gain 5% support in a simulation, we zeroed out their support and reweighted the support for the other parties. Using this model and our decision rule, we got the following results.
It seems highly likely that the Union will continue to be a partner in the government with either the Greens, the SPD, or both. There is also a significant chance that the Union will enter into a partnership with the FDP (~8.2 %) or the parties on the left join a coalition (~6.7 %).
We will update this forecast as new polling data becomes available. But, we hope this gave you a sense of the probable outcomes of this election.