German federal elections on 24 September 2017 saw Angela Merkel’s Christian Democratic Union (CDU) and its sister party the Christian Social Union (CSU) together remain the biggest group, however they suffered great losses. The Social Democratic Party of Germany (SPD), led by former European Parliament President Martin Schulz, stayed on as the second largest party with 20.5% of the vote but also lost seats. The right-wing populist Alternative for Germany (AfD) benefited from decreased support for mainstream parties, entering the Parliament for the first time as its third largest party with 12.6% of the vote.  The liberal Free Democratic Party (FDP) of Germany (10.7% – 80 seats), the Left (Die Linke – 69 seats from 9.2% of the vote) and the Greens (Bündnis 90 Die Grünen) (8.9% – 67 seats) complete the new Bundestag.

This result left few options for government formation. After coalition talks between the CDU/CSU, the FDP, and the Greens collapsed in November 2017, Germany steeled itself for the limited and unpalatable remaining options: minority government by the CDU/CSU, new elections, or a so-called ‘Grand Coalition” (Große Koalition or “GroKo”) between the CDU/CSU and the SPD – the third such government out of the 4 previous Merkel-led administrations.

Talks for a GroKo between the CDU/CSU and the SPD were launched (formally) on 26 January 2018 and a coalition agreement (“Koalitionsvertrag”) was agreed on 7 February. On 4 March, the SPD party members approved the GroKo with a 66% majority. On 5 March, German President Frank-Walter Steinmeier formally proposed Merkel for reelection, planned for this week.

Now that the political uncertainty has ended in Berlin, there is no doubt that the impact and the policies of the new coalition government will felt in Brussels. The EU will be relieved to see the return of the GroKo, preferable to anymore drawn out uncertainty, or worse yet, fresh elections leading to an unhampered populist surge in the Union’s most powerful Member State led by the AfD.

The deal does not mean that the coalition partners will govern without opposition—the AfD is now the leading opposition force, and there will be contention in the ranks. Both parties are under pressure to differentiate themselves more successfully in the new edition of the GroKo. In these earliest days of the coalition, this is already apparent. For instance, new CDU Secretary General Kramp-Karrenbauer used her first speech to promise to make Berlin “a place where there’s a real contest” again.

In the end, both parties will have to work hard to recharm the public and win approval. 5 months of political wrangling have cost the CDU/CSU, and the SPD is quite literally in tatters over the decision to renew the GroKo. Many members, in particular the youth fraction, continue to oppose it.