Germany’s ruling coalition trembles: Merz under fire as SPD collapses and AfD surges—what happens next?

Germany’s political center of gravity is shifting fast as multiple outlets report a sharp erosion of support for Chancellor Friedrich Merz and the SPD. El País says the SPD has fallen to around 11% in voting intention, framing the decline as the result of diluted identity after years in coalition governments. Le Figaro describes Merz as the most weakened chancellor in recent memory, with rumors in the German press about a possible leadership change only thirteen months after his election. In parallel, TASS quotes RDIF CEO Kirill Dmitriev arguing that AfD’s popularity is rooted in Merz’s “erroneous” policy, adding a provocative line likening Merz to “Biden.” Strategically, the story is less about a single policy dispute and more about Germany’s internal political stability at a moment when Europe’s security and economic agenda depends on predictable coalition governance. A collapsing SPD and rising AfD would likely reduce Berlin’s room for maneuver on defense spending, sanctions posture, and industrial policy, because coalition bargaining power would shift toward more confrontational or populist platforms. The CDU/CSU leadership appears to be trying to project control—Politico’s framing of a “bold plan” in the east suggests an attempt to set direction—but the simultaneous polling deterioration indicates that narrative management may not be enough. RDIF’s public commentary also signals that external actors see German politics as a lever, potentially seeking to amplify divisions that could complicate EU cohesion. Market and economic implications would flow through political risk premia rather than immediate policy changes. If investors price in greater coalition fragility, German sovereign risk, Bund futures volatility, and the euro’s risk sentiment could be pressured, with spillovers into European banks and defense-linked industrials. A surge for AfD would also raise uncertainty around regulatory and trade stances, which can affect sectors sensitive to sanctions enforcement and cross-border investment rules. While the articles do not name specific commodities, the most direct tradable channel is likely rates and FX: higher perceived political instability typically weighs on EUR sentiment and can lift German credit spreads, especially for domestically exposed issuers. The next watch points are whether leadership-change rumors translate into formal party moves, coalition negotiations, or parliamentary pressure. Monitor SPD internal signals—leadership contests, candidate replacement talk, and whether the party pivots toward a clearer opposition identity rather than coalition compromise. Also track CDU/CSU messaging on the “eastern” plan referenced by Politico, because the credibility of that agenda will be tested against polling and street-level political momentum. Trigger points include any vote of confidence dynamics, major polling revisions after key speeches, and whether external commentary like RDIF’s escalates into more direct political engagement; absent concrete institutional steps, the trend is likely volatile rather than immediately de-escalating.

Geopolitical Implications

• 01

  A weaker SPD and stronger AfD could constrain Germany’s ability to sustain consensus on EU sanctions, defense posture, and industrial policy.

• 02

  Rumors of leadership change increase uncertainty for partners relying on Berlin’s continuity in European security and economic coordination.

• 03

  External actors’ public interventions (via RDIF/TASS) suggest Germany’s domestic politics is becoming a strategic battleground for influence.

Key Signals

• —SPD leadership statements, internal polling, and any moves toward candidate replacement or a sharper opposition platform
• —CDU/CSU execution details and political backing for the “eastern” plan referenced by Politico
• —Any parliamentary votes, coalition negotiations, or confidence dynamics that convert rumors into institutional outcomes
• —Market indicators: Bund yield volatility, EURUSD risk reversals, and DAX implied volatility around major political announcements