With the German elections fast approaching, investors are keeping an eye out for the possible effects of the election in the U.K. economy.
The German election is set to take place this fall of 2017 amid a time of political uncertainty and a string of events that led to the fallout of several key members of the European Union. The International election season of 2016 and 2017 has been closely watched, due to the widespread interjection of nationalistic subjects and ongoing political debates.
The federal election of Germany could potentially create worries and could spread implications all throughout Europe. Political uncertainty can still impact the economic growth and currency valuations, even though the financial relationship between Germany and the U.K. is one of the most substantial in all of the Eurozone.
What could the election mean for the Brexit
Mrs. Merkel is in such a strong position then the German election is likely to have a little impact on the EU’s Brexit talks with Britain. In addition to that, the Center for European Reform stated that all parties will more or less agree on the Brexit stance so the elections means “very little” for Brexit.
What would the German election mean for the EU?
The German election is unlikely to spark a crisis for the EU, even though the parties that will win in the ruling coalition could help in shaping Europe’s future. The CER states that the reform ideas of Emmanuel Macron will push through if the FDP were part of Mrs. Merkel’s coalition after the election.
The U.K. and German trade
The extent of the economic relationship between the U.K. and Germany has grown, making any change in leadership a considerable event. The strongest reason for the elite GDP rankings of the two countries is the depth of their interrelationship when it comes to their foreign trade.
Germany serves as the U.K.’s second-largest export destination as well as its largest source of imports.
Although the impact of the election in the U.K.’s economy will be challenging to forecast, but a few things are clear. If the new German leadership promotes economic policies which would encourage robust trade with the U.K., then positive growth is a possibility, but if the winner of the election would choose to take the hard line stance against the U.K.’s brexit vote, then a contraction in GDP would lead by a reduced trade will be possible.