Key Challenges

Policy effectiveness with increasing party fragmentation
Traditional large parties coming under stress
The transformation of the German party system has put the traditional large parties (“Volksparteien”), the CDU/CSU and the SPD, under particular stress. These parties have to redefine their role within a more fragmented and polarized party system. So far, experiences at the level of the states, with their growing variety of coalition combinations, seem to signal that this change has not damaged the ability to engage in effective policymaking. Whether this also holds for the federal level remains to be seen. The long duration and complications of the coalition negotiations following the 2017 federal election could foreshadow emerging problems and instabilities. All parties that are firmly grounded in the constitutional order and which share the same basic values of a free and open society should avoid ruling out any coalition options with one another, even if they differ significantly in their political programs.
Concerns about a cyclical downswing that could be structural
Major threats to national industry looming
As of the close of the review period, the German economy had coped reasonably well with the consequences of the global trade conflict and its dampening effects on world trade. However, it is to some extent uncertain whether Germany was experiencing a normal cyclical downturn or feeling the effects of a more fundamental change in the economic environment. Concern about a potentially major threat to the country’s long-standing competitive advantage is particularly relevant within the car industry. This industry is currently dealing with both the digital revolution and the transition to electric drives now strongly supported by national and European regulation. The car industry and its suppliers are of significant macroeconomic importance for Germany, and particularly crucial in the regions that have served as the country’s economic powerhouses.
The long path to a CO2-neutral economy
Many climate-policy questions unanswered; careful communication required
The country’s new ambitions in climate policy, coming as a reaction to voters’ concerns about climate change, have led to the important decision to implement a comprehensive CO2 price applicable even the areas of traffic and housing. But the passage of new and seemingly ambitious climate-protection legislation does not yet guarantee successful implantation. The energy- and climate-policy decisions made in recent years have left many questions unanswered. It is still far from clear whether plans to shut down all nuclear-power plants by 2022, and a quick subsequent phase-out of fossil-fuel-based power generation, are consistent with the continued ability to guarantee a reliable electricity supply. New conflicts are emerging with regard to the required expansion of windmill construction, which will be indispensable for the necessary renewable-energy capacity increase. “Not in my backyard” is a strong reflex even for ecologically minded German voters who in theory support an ambitious climate policy. These inconsistencies in voter reactions imply political risks: Even if voters are in favor of climate protection in general, they may punish politicians who actually implement prices felt by car drivers or heating-fuel users through the new CO2 tax. Careful communication will be required in the coming years, and opposition parties will have to act responsibly to avoid discrediting the country’s energy transformation strategy.
Demographic trends pose increasing danger
Pension, health systems face growing threats
The current and preceding governments have acted shortsightedly with regard to pension policies. The grand-coalition governments have increased the generosity of pension systems generally, while providing additionally higher pensions for mothers, low-income earners and workers who have been in the labor force for exceptionally long periods. However, no solution was developed for adapting the system to increases in longevity and the increases in dependency ratios that will pick up speed in the 2020s. A pension commission was established that was slated to produce a report by March 2020 on how stabilize both pensions levels and contribution rates. The political process must allow for an open debate on possible options, without taboo topics (e.g., on the potential of linking retirement age automatically to life expectancies). The health system faces equally serious challenges with regard to financial sustainability.
Digitalization and infrastructure
Infrastructures in need
of further investment
Preparing Germany for the digital age is a comprehensive task that requires adjustment across numerous fields, including secondary and tertiary education, public administration, and innovation and infrastructure policy. Critics are increasingly pointing to the insufficiency of digital networks, as well as rising problems in the rail- and road-transport networks. Government budgets must try to rebalance spending toward these avenues of value creation at the expense of current spending. However, equal attention should be given to improving the conditions for private investment in digital infrastructure.
Voter competency and political involvement in the digital age
Critical need to sustain political engagement
All of the key challenges mentioned thus far involve complicated trade-offs. Governments can only communicate successfully if they transmit their messages to voters who are capable of receiving nuanced information. A crucial problem in this regard, as for all other democracies in the digital age, is the changing information-gathering behavior of the new generations. Within Germany, surveys indicate a low level of interest in politics and low levels of political knowledge among younger cohorts. Media use is intense within the younger age groups, but has shifted away from information toward mere entertainment. Badly informed citizens may either abstain from voting or be susceptible to the misinformation and manipulative campaigns of populist movements and parties. Parents, schools, media, the civil society and politicians must work hard to reach out to the younger generation in order to ensure that the electorate remains interested and informed, an indispensable precondition for a functioning democracy.

Party Polarization

Increasingly polarized
party system
Since the general election on 24 September 2017, the German party system has not only changed but also become more polarized. The party system now appears to be a typical multiparty system with six parties in the federal parliament, including the CDU/CSU, the SPD, the FDP, the Greens, the Left (die Linke) and the AfD. The same tendency exists for the Länder parliaments, where the anti-immigration and anti-EU AfD has gained seats in all states, with particularly high shares in some of the states of the former East Germany. This has been exacerbated by the fact that the vote shares accrued by the traditional major parties, the CDU and the SPD, have fallen dramatically, which means they are no longer dominant forces at either the federal or the Länder level.
Growing presence of left and right poles; right-wing party still excluded from coalitions
Because both the left and right poles of the political spectrum are represented in the Länder parliaments and the Bundestag, and indeed have been increasing their vote shares in most of these bodies, the German party system can now be classified as fragmented and polarized. Although this fragmentation and polarization is much weaker today than it was during the Weimar Republic in the inter-war years, it is much stronger than in most periods of the post-war era. The political positions of the traditional parties of government (i.e., the SPD and CDU/CSU) have substantially converged over the years, opening up a political space for more extreme competitors. In the state parliaments, numerous variants of coalitions exist, which all form functioning and stable governments, indicating that the rise of the multiparty system has so far not damaged effective policymaking. The only exception in coalition formation refers to the anti-immigration right-wing party, the AfD, which all other parties have hitherto excluded from any coalition. However, evidence for the 2013 – 2017 period indicates that the AfD was and still is able to exert a considerable influence over migration policy. Moreover, in many instances, coalition partners have a difficult time reaching a compromise and have adopted policies that have failed to satisfy supporters on either side, which tends to lead to a further decline in opinion poll ratings for the governing parties, particularly the SPD. (Score: 7)
Fabian Engler, Svenja Bauer-Blaschkowski and Reimut Zohlnhöfer 2019: Disregarding the Voters? – Electoral Competition and the Merkel Government’s Public Policies, 2013-17, German Politics Vol. 28 (3): 312-331.
Carsten Grabow, Sabine Pokorny 2018: Das Parteiensystem in Deutschland ein Jahr nach der Bundestagswahl. Bonn: Konrad Adennauer Stiftung.
Christian Franz, Marcel Fratzscher und Alexander S. Kritikos 2019: Grüne und AfD als neue Gegenpole der gesellschaftlichen Spaltung in Deutschland. In: DIW Wochenbericht 34 / 2019, S. 591-602.
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