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Deutsche Bank: Germans embrace euro despite ongoing crisis

69% of the German population are backing the euro as their currency today and expect it to remain so in the future. Only 27% would prefer a return of the D-Mark. These figures, which contrast with foreign observers questioning Germany’s willingness to further support the stabilisation of the euro area, were revealed by a representative poll today.

  • As regards party preferences, acceptance is particular high among supporters of the Green Party and the FDP (88% and 83%, respectively) followed by those favouring the CDU/CSU (75%). SPD voters show the relatively lowest support (68%) and are the most skeptical about the future of the euro.
  • These results support our long-held view that the euro and government’s crisis management in particular are unlikely to become topical in the campaign for this year’s federal election on September 22. Despite political rhetoric, the opposition of SPD and Greens reluctantly subscribe to the government’s crisis management as we will see (again) with the upcoming approval of the bail-out package for Cyprus. These polls also show that the potential of anti-euro parties such as the newly founded AfD remains very moderate and clearly lower than in any other euro area state.

Going into its fourth year, the euro area crisis has not fuelled anti-euro sentiment in Germany. On the contrary: According to a new poll by the Forsa Institute, 69% of the population think that Germany should keep the euro, only 27% would prefer a return to the D-Mark. The same percentage expects the euro to remain the currency for the future. On a more detailed basis

  • support for the euro is increasing with education and income. Only low-income earners (up to EUR 1,000) show support of less than 50% while at the upper end of the education and income range support is approaching 80%.
  • at 71%, support is highest among younger (18-29 years) and older people (above 60 years). The two groups diverge, however, in their assessment of the future of the euro – while a third of the younger people see the euro replaced by another currency, only 17% of the older generation expect this to happen.

Compared to previous polls, these are surprisingly clear results which contrast with the perception of foreign observers that euro fatigue prevails in Germany. One explanation might be that the ongoing debate – despite all its shortcomings – has made people more aware of the risks and the costs for Germany of a break-up of the euro area and the advantages of the common currency for an export-driven economy. The positive attitude, however, does not mean the Germans have no concerns regarding the safety of their savings and old-age provisions but in people’s minds, this is apparently detached from an assessment of the euro as a currency.

Analyses according to party preferences also reveal interesting though not completely surprising facts. Support for the euro is highest among the voters of the Green Party (88%), which confirms the strong pro-European attitude of this party as well as the above-average income levels of its supporters. The Greens have been the only party that has come up with its own proposals for changes to the euro area framework such as the euro redemption fund. They are also in favour of Eurobonds. Refuting prejudices, 83% of the FDP electorate supports the euro which might explain why last year’s attempt by the FDP to improve its ratings by adopting a more euro-sceptical approach has failed. Among the governing CDU/ CSU the euro is seen as positive by 75%. The SPD voters can be found at the other end of the range, showing the (relatively) lowest support for the euro at 68% – a difference of 20 percentage points to their potential coalition partner in a federal government, the Green party. Apart from political positions, this gap also reflects the different compositions of the respective electorates with highly educated, well-off Green voters and more workers and low-income earners on the side of the SPD. The results for the SPD also contrast with the opinion held by foreign observers that the SPD, should it come to power, would assume an even more euro-friendly policy in terms of support for Eurobonds or related mutual liability instruments. However, in a potential governing coalition with the Green Party the SPD might be willing to assume a more integrationist policy (for which the German Constitutional Court has set out clear guidelines, though).

For the time being, there are two major political consequences of this overall positive attitude towards the euro:

First, returning concerns by E(M)U partners that Chancellor Merkel’s crisis management is losing support in the German electorate are largely unjustified. A majority of the population is backing Chancellor Merkel’s course in crisis management and is prepared for continued fiscal solidarity as long as the receiving countries show a clear commitment to adjust. More so: 68% of the population are satisfied with her work and still 60% want to keep her as chancellor – a 35 pp gap to her challenger, Peer Steinbrück, from the SPD.

Second, as in all previous German federal elections and despite the crisis, euro(pean) policy is not likely to become a major topic in the federal election campaign. This will make success even more difficult for new parties with a single election topic, e.g. an anti-euro position, such as the Alternative für Deutschland (AfD). Instead, the focus of the election campaign will be on social justice, on tax and social security issues. These questions used to be the home-turf of the Social Democrats but since the SPD is trailing far behind the CDU/ CSU in the polls they do not seem able to play out their image. However, as the two party camps are neck-and-neck in the polls and with five months to go, the outcome of the election is wide open.

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