Germany's conservatives win national election as coalition talks loom

Germany's opposition conservatives, CDU/CSU, won the national election, positioning Friedrich Merz to become the next chancellor. The far-right Alternative for Germany (AfD) achieved its best result, coming in second. Coalition talks are expected to be lengthy. Analysts suggest that forming a three-party coalition may complicate economic policies. If the coalition includes the Free Democrats (FDP), significant fiscal stimulus is unlikely, focusing instead on tax relief and increased defense spending. A potential CDU-SPD coalition could improve Germany's competitiveness if both parties collaborate effectively. The CDU may push for tax cuts and reduced bureaucracy, while the SPD would advocate for increased infrastructure investment.