Germany faces complex coalition talks after fragmented election results

Germany's recent election has led to a fragmented parliament, complicating coalition talks. The opposition conservatives, led by Friedrich Merz, won, while the far-right Alternative for Germany achieved its best result. This uncertainty may prolong economic stagnation. Merz may need one or two additional parties to form a majority. If the leftist parties fail to secure seats, a two-party coalition with the SPD is possible. Otherwise, a three-party coalition could face challenges in agreeing on budgets and reforms. Proposed tax cuts by the CDU could improve Germany's competitiveness, but financing remains unclear. The potential reform of the constitutional debt limit is uncertain, depending on coalition negotiations and party support.