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The economic impact of Germany’s early election

The collapse of its coalition government, triggered by disagreement over fiscal policy, means Germany will probably have a CDU-led government by mid-2025. This may be more stable and functional than the outgoing coalition, but would face the same constraints and challenges as well as a more protectionist US government. The outlook for the German economy would remain very poor. This Update answers key questions, starting with political developments and moving on to the economic implications.

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