German government close to collapse

Via the FT:

Horst Seehofer, the German interior minister, has set Angela Merkel an ultimatum, saying he would resign unless the chancellor acceded to his demands for tougher controls on the German border.

It was the latest development in a conflict that could threatens to shatter the alliance between Mr Seehofer’s Bavarian CSU party and Ms Merkel’s CDU, a union that has formed the bedrock of German politics for nearly 70 years.

That could lead to the collapse of Ms Merkel’s coalition government just three months after it came into office and throw the future of the EU’s longest-serving leader into doubt.

If the deal can’t be brokered and Germany must go back to the polls then expect more gains for the far-Right, more EUR weakness, more USD strength and ever more pressure on EM and the AUD.

David Llewellyn-Smith
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