Blow for Germany's Merz as he loses first-round vote for chancellor
Germany's conservative leader Friedrich Merz suffered a serious blow on Tuesday when he failed to win a parliamentary majority in the first round of voting to become the next chancellor.
The unexpected setback -- a first in German post-war history -- prolongs the half-year of political paralysis in Berlin since the collapse of the coalition government of Olaf Scholz, which sparked elections in February.
Hoping to become modern Germany's 10th chancellor, election winner Merz has vowed to revive the ailing economy and strengthen Berlin's role in Europe as it responds to heightened geopolitical turbulence since US President Donald Trump returned to power.
But Tuesday's parliament vote, which had been widely seen as a formality, sparked fresh turmoil and pointed to dissent within the ranks of the two-party coalition hoping to rule Germany.
To take over as chancellor, Merz needed an absolute majority of 316 of the 630 lower house votes in the secret ballot. But he only won the backing of 310 MPs, with 307 voting against him.
His CDU urged a second round vote as early as Tuesday but no new date had been set.
Other parliamentary factions would have to agree to hold a fresh vote before Friday.
According to the constitution a second round of voting has to take place within 14 days.
If that fails, then a third phase would take place in which a simple majority of lawmakers -- with yes votes outnumbering no votes -- would suffice to see Merz elected.
"Merz will most likely still be elected as chancellor in the end," wrote analyst Holger Schmieding of Berenberg Bank.
"But even so, the unprecedented failure to be elected in the first round would still be a bad start for him. It shows that he cannot fully rely on his two coalition parties.
"That will sow some doubts about his ability to fully pursue his agenda, damaging his domestic and international authority at least initially."
- Far-right cheers -
Capital Economics analyst Franziska Palmas also argued that Merz's setback "will probably not prevent him and the Grand Coalition from taking power in the coming days or weeks.
"However, it does leave Merz severely weakened and suggests that hopes for more stability in German politics may be disappointed and that the government may struggle to push through its economic policy agenda."
Merz had relied on unified backing of a coalition of his CDU/CSU alliance, which won February's general elections, and the centre-left Social Democrats (SPD) of Scholz, who together have 328 seats.
Of the 630 MPs in the lower house, three lawmakers abstained, nine were absent and there was one invalid ballot paper.
The far-right Alternative for Germany (AfD) -- the largest opposition party, which scored a record result of over 20 percent in the election -- cheered the surprise result.
"Merz should step aside and the way should be cleared for a general election," said AfD co-leader Alice Weidel, calling the result a "good day for Germany".
The result keeps Scholz in the post of caretaker chancellor for now and has upended the political calendar in Berlin.
President Frank-Walter Steinmeier had been due to swear in the new cabinet and Merz had planned visits to Paris and Warsaw on Wednesday.
Bodo Ramelow of the far-left opposition party Die Linke said he was "angry" that Merz and his designated vice chancellor Lars Klingbeil of the SPD "allowed such a situation" to come about.
- 'Profound upheaval' -
Germany's political drama has come at a time when Trump has upended long-standing transatlantic security and trade ties and rattled allies by reaching out directly to Russia to end the Ukraine war.
Trump has heaped pressure on European allies, complaining that they spend too little on NATO.
He has also accused them of taking advantage of the United States by running trade surpluses and has imposed tariffs, a move especially painful to export power Germany.
Merz, who boasts a strong business background but has never held a government leadership post, said on Monday: "We live in times of profound change, of profound upheaval... and of great uncertainty.
"And that is why we know that it is our historic obligation to lead this coalition to success," he said.
Expecting to take power, the coalition has already secured hundreds of billions of euros (dollars) in fiscal firepower under a spending "bazooka" passed by the outgoing parliament.
Their stated aim is to rebuild crumbling infrastructure and the long-underfunded military, while boosting an economy which has shrunk for the past two years.
The head of the Council of Economic Experts that advises the government, Monika Schnitzer, urged a quick solution, saying that "any form of uncertainty is poison for the economy".
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
SBS Australia
3 days ago
- SBS Australia
SBS News in Filipino Thursday, 12 June 2025
Filipino-Australians commemorate 127th Independence Day. The future of the AUKUS three-way pact with Australia, the U-S and U-K could be in-doubt, with a new review by the Pentagon - the United States' defence agency. German Chancellor Friedrich Merz has welcomed the new trade agreement between the U-S and China, saying he hopes Europe can achieve a similar outcome. 📢 Where to Catch SBS Filipino 📲 Catch up episodes and stories – Visit or stream on Spotify , Apple Podcasts , Youtube Podcasts , and SBS Audio app.
News.com.au
4 days ago
- News.com.au
German investor Deutsche Balaton has built an ASX empire, and it's backing this battery stock to the hilt
German investor Deutsche Balaton has built an empire of ASX resources stocks It's also branching out, holding a role as battery stock Altech's major shareholder This is how DB's Wilhelm Zours invests, and why Altech is one of its key ASX holdings Any clued-in observer of the energy market knows solar and wind power is just one part of the solution for green energy. Now mainstream technologies, the key is not solar panels and turbines, it's working out how to store that energy for round-the-clock power. With the growth in the rollout and usage of AI, experts expect to see a rise in the use of battery energy storage systems (BESS), allowing data centres to be supplied with a cost effective and steady base-load. While the battery market explores everything from lead-acid to sodium-ion, Altech Batteries (ASX:ATC) stands alone on the ASX with a game-changing chemistry using simple table salt and nickel powder – sidestepping costly, high-demand critical minerals. And the company's technology comes with a key backer in one of the ASX's leading resources investors, a major show of support from a backer normally known for providing the capital to turn lithium and gold small caps into major players. Founded and led by German businessman Wilhelm Konrad Zours, Deutsche Balaton has been a fixture in ASX resources investing for years. Its appearance at the head of Altech's register, with a combined stake across multiple entities of 16.5%, lends credence to the battery tech stock's growth story. Investor backing Deutsche Balaton's backing has gone further than simply holding equity. In a strong vote of confidence, the German investment firm agreed to a $4.28M loan facility in March to fuel Altech's CERENERGY and Silumina Anodes developments. By offering the loan in the form of a binding bond note subscription deed, Altech has been able to draw down the funds in the form of bearer bonds, with interest set at 7% per annum. Speaking with Stockhead, Altech chief financial officer Martin Stein said Deutsche Balaton has been a supportive shareholder throughout the years, first joining the company's register about six years ago. The synergies are even stronger than many of the firm's ASX investments, given Altech's plans to base its plants in an industrial park in Saxony, close to the European EV industry. 'Deutsche Balaton has provided capital and debt instruments to help finance Altech's objectives,' he said. 'From a geographical standpoint, being close to both of Altech's battery projects in Germany, I think the company can see the enormous potential of CERENERGY and the Silumina Anodes projects.' How does Altech's tech work? Without the danger of thermal runaway, extended durability and a broad operating range from -40°C to 60°C, Altech's solid-state chemistry dubbed CERENERGY sets a new standard for battery safety and performance in stationary storage solutions like grid infrastructure and data centres. Altech's other development, Silumina Anodes, is tackling one of the toughest battery challenges when using silicon in battery anodes, the issue of silicon swelling. During charging, silicon particles can expand by as much as 300%, causing swelling and fracturing that may lead to battery failure. It also tends to immobilise lithium ions, which can reduce overall performance and shorten battery lifespan. By using alumina-coated particles, Altech believes it has cracked the silicon code. Through in house R&D and by optimising the silicon content to 5%, the company has achieved a 50% higher energy battery with improved cyclability and battery life. In its push to bring patented technology to market, Altech has built a pilot plant next to the proposed project site in Saxony, Germany, where it is now successfully producing coated silicon for its Silumina Anodes product qualification. Broad ASX exposure Altech may have drawn Deutsche Balaton to its battery-tech plans, but the firm is active across a broader portfolio of ASX resources companies. Among its best bets was backing Azure Minerals, which netted the connected Delphi Group a $176m payout after the Andover lithium project owner's $1.7bn sale to SQM and Hancock Prospecting. Its other big investments include a 6.32% stake in critical minerals explorer Evolution Energy Minerals (ASX:EV1), owners of the Chilalo graphite project in Tanzania which is advancing towards FID. An updated DFS for Chilalo in March 2023 demonstrated a high-quality project based on average annual throughput of 500,000tpa at 10.6% TGC to produce 52,000tpa of graphite concentrate for downstream processing. The company recently unveiled a new strategic direction, focused on acquiring gold development assets in Africa, with the backing of its largest shareholder – Sustainable Resources Fund (ARCH). The German firm has also taken position in several ASX gold stocks, now reaping the rewards of a gold price near all-time highs at ~$5000/oz. Its portfolio includes 1% of Spartan Resources (ASX:SPR), having largely cashed out by selling much of its stake to SPR's now merger partner Ramelius Resources (ASX:RMS) in a strategic move last year. The gold developer had massively rerated off the back of its Never Never discovery at the Dalgaranga gold project – a reward for Zours and Co.'s patience having backed the firm back in its desperate Gascoyne Resources days. Also in WA and PNG's gold fields it holds major positions in Matsa Resources (ASX:MAT) (~19.6%), Patronus Resources (ASX:PTN) (42.35%), and Geopacific Resources (ASX:GPR) (~46%). Over in PNG, a move from St Barbara to acquire the holding of Deutsche linked PTN in GPR could open up more M&A value creation for the German money men. It's also active across other commodities like high purity alumina (HPA) with a 6.17% holding in Impact Minerals (ASX:IPT), the developers of the 80% owned Lake Hope project in WA. Lake Hope has a measured resource of 730,000t grading 25.8% alumina, or 189,000t of contained alumina, providing strong assurance that it can support the proposed 10,000tpa HPA plant over a 15-year period. This resource will also underpin a maiden probable or proven reserve subject to ongoing mining studies, test work and economic studies to be completed as part of the PFS currently underway. Deutsche Balaton holds a 21.7% stake in Tivan (ASX:TVN), giving it exposure to vanadium and fluorite, along with copper-zinc through a 2.3% stake in Orion Minerals (ASX:ORN).
The Advertiser
5 days ago
- The Advertiser
Stocks stall as investors watch US-China trade talks
Global stocks and the dollar have held steady as trade talks between the United States and China continued into a second day, giving investors some reason to believe tensions between the world's two largest economies may be easing. US Commerce Secretary Howard Lutnick said discussions between the two sides were going well, while President Donald Trump on Monday put a positive spin on the talks after Monday's session. Lutnick, together with Treasury Secretary Scott Bessent and US Trade Representative Jamieson Greer met their Chinese counterparts in London. Any progress in the negotiations is likely to provide relief to markets given that Trump's often-shifting tariff announcements and swings in Sino-US ties have undermined the two economies, disrupted supply chains and threaten to hobble global growth. World stocks, as reflected by the MSCI All-Country World index, traded near record highs on Tuesday while the dollar steadied against a range of currencies. "While market participants are clearly taking a glass half-full view of the outlook, both on trade policy and more broadly, we don't think that should be interpreted as a view that tariffs will be fully unwound," said Jonas Goltermann, deputy chief markets economist at Capital Economics. Goltermann anticipates US duties on Chinese goods to settle at around 40 per cent, while most analysts have said that the universal 10 per cent levy on imports into the United States is here to stay. In Europe the STOXX 600 edged lower, led by UBS whose shares dropped seven per cent as investors worried about the impact of new government proposals to force the Swiss bank to hold $US26 billion in extra capital. US stock futures were trading around 0.1 per cent higher. Meanwhile in Tokyo, Finance Minister Katsunobu Kato said policymakers were looking at measures to promote domestic ownership of Japanese government bonds, a day after Reuters reported that Japan is considering buying back some super-long government bonds issued in the past at low interest rates. The yield on the 10-year JGB was flat at 1.47 per cent, while 30-year yields were up one basis point at 2.92 per cent, having retreated from late May's record high of 3.18 per cent. The yen strengthened throughout the day, leaving the dollar roughly unchanged on the day around 144.5 yen, while the euro also turned positive, up 0.1 per cent at $US1.1428. The pound dropped 0.3 per cent to $US1.35 after weak UK employment data. Trump's erratic trade policies and worries over Washington's growing debt pile have dented investor confidence in US assets, in turn undermining the dollar, which has already fallen more than eight per cent this year. "It's not that the Americans are blowing up their fiscal situation because the deficit is going to remain more or less stable. But the quality of the deficit has degenerated," said Samy Chaar, an economist at Lombard Odier. "If you invest, and spend on productive investments, you'll get macro payoffs, because you're going to develop an industry, you're going to strengthen your economy, you're going to create jobs, you have a payoff. "If you spend by basically reducing revenues because you cut taxes on people who don't need the money, they won't be consuming more, or investing more, so the macro payoff is more limited." US Treasuries were yielding around 4.45 per cent, down 3.4 basis points on the day. Data on US consumer inflation for May due out on Wednesday could show the impact on tariffs on goods prices. The producer price index (PPI) report will be released a day later. "May's US CPI and PPI data will be scrutinised for signs of lingering inflationary pressures," said Convera's FX and macro strategist Kevin Ford. "If core CPI remains elevated, expectations for rate cuts could be pushed beyond the June 18 FOMC meeting." Traders expect the Fed to leave rates unchanged at its policy meeting next week. Just 44 basis points worth of easing have been priced in by December. In commodity markets, oil prices rose on the back of optimism that Tuesday's US-China talks could ease trade tensions and improve demand for energy, pushing Brent crude up 0.5 per cent to $US67.40 a barrel. Spot gold rose 0.4 per cent to $US3,341 an ounce. Global stocks and the dollar have held steady as trade talks between the United States and China continued into a second day, giving investors some reason to believe tensions between the world's two largest economies may be easing. US Commerce Secretary Howard Lutnick said discussions between the two sides were going well, while President Donald Trump on Monday put a positive spin on the talks after Monday's session. Lutnick, together with Treasury Secretary Scott Bessent and US Trade Representative Jamieson Greer met their Chinese counterparts in London. Any progress in the negotiations is likely to provide relief to markets given that Trump's often-shifting tariff announcements and swings in Sino-US ties have undermined the two economies, disrupted supply chains and threaten to hobble global growth. World stocks, as reflected by the MSCI All-Country World index, traded near record highs on Tuesday while the dollar steadied against a range of currencies. "While market participants are clearly taking a glass half-full view of the outlook, both on trade policy and more broadly, we don't think that should be interpreted as a view that tariffs will be fully unwound," said Jonas Goltermann, deputy chief markets economist at Capital Economics. Goltermann anticipates US duties on Chinese goods to settle at around 40 per cent, while most analysts have said that the universal 10 per cent levy on imports into the United States is here to stay. In Europe the STOXX 600 edged lower, led by UBS whose shares dropped seven per cent as investors worried about the impact of new government proposals to force the Swiss bank to hold $US26 billion in extra capital. US stock futures were trading around 0.1 per cent higher. Meanwhile in Tokyo, Finance Minister Katsunobu Kato said policymakers were looking at measures to promote domestic ownership of Japanese government bonds, a day after Reuters reported that Japan is considering buying back some super-long government bonds issued in the past at low interest rates. The yield on the 10-year JGB was flat at 1.47 per cent, while 30-year yields were up one basis point at 2.92 per cent, having retreated from late May's record high of 3.18 per cent. The yen strengthened throughout the day, leaving the dollar roughly unchanged on the day around 144.5 yen, while the euro also turned positive, up 0.1 per cent at $US1.1428. The pound dropped 0.3 per cent to $US1.35 after weak UK employment data. Trump's erratic trade policies and worries over Washington's growing debt pile have dented investor confidence in US assets, in turn undermining the dollar, which has already fallen more than eight per cent this year. "It's not that the Americans are blowing up their fiscal situation because the deficit is going to remain more or less stable. But the quality of the deficit has degenerated," said Samy Chaar, an economist at Lombard Odier. "If you invest, and spend on productive investments, you'll get macro payoffs, because you're going to develop an industry, you're going to strengthen your economy, you're going to create jobs, you have a payoff. "If you spend by basically reducing revenues because you cut taxes on people who don't need the money, they won't be consuming more, or investing more, so the macro payoff is more limited." US Treasuries were yielding around 4.45 per cent, down 3.4 basis points on the day. Data on US consumer inflation for May due out on Wednesday could show the impact on tariffs on goods prices. The producer price index (PPI) report will be released a day later. "May's US CPI and PPI data will be scrutinised for signs of lingering inflationary pressures," said Convera's FX and macro strategist Kevin Ford. "If core CPI remains elevated, expectations for rate cuts could be pushed beyond the June 18 FOMC meeting." Traders expect the Fed to leave rates unchanged at its policy meeting next week. Just 44 basis points worth of easing have been priced in by December. In commodity markets, oil prices rose on the back of optimism that Tuesday's US-China talks could ease trade tensions and improve demand for energy, pushing Brent crude up 0.5 per cent to $US67.40 a barrel. Spot gold rose 0.4 per cent to $US3,341 an ounce. Global stocks and the dollar have held steady as trade talks between the United States and China continued into a second day, giving investors some reason to believe tensions between the world's two largest economies may be easing. US Commerce Secretary Howard Lutnick said discussions between the two sides were going well, while President Donald Trump on Monday put a positive spin on the talks after Monday's session. Lutnick, together with Treasury Secretary Scott Bessent and US Trade Representative Jamieson Greer met their Chinese counterparts in London. Any progress in the negotiations is likely to provide relief to markets given that Trump's often-shifting tariff announcements and swings in Sino-US ties have undermined the two economies, disrupted supply chains and threaten to hobble global growth. World stocks, as reflected by the MSCI All-Country World index, traded near record highs on Tuesday while the dollar steadied against a range of currencies. "While market participants are clearly taking a glass half-full view of the outlook, both on trade policy and more broadly, we don't think that should be interpreted as a view that tariffs will be fully unwound," said Jonas Goltermann, deputy chief markets economist at Capital Economics. Goltermann anticipates US duties on Chinese goods to settle at around 40 per cent, while most analysts have said that the universal 10 per cent levy on imports into the United States is here to stay. In Europe the STOXX 600 edged lower, led by UBS whose shares dropped seven per cent as investors worried about the impact of new government proposals to force the Swiss bank to hold $US26 billion in extra capital. US stock futures were trading around 0.1 per cent higher. Meanwhile in Tokyo, Finance Minister Katsunobu Kato said policymakers were looking at measures to promote domestic ownership of Japanese government bonds, a day after Reuters reported that Japan is considering buying back some super-long government bonds issued in the past at low interest rates. The yield on the 10-year JGB was flat at 1.47 per cent, while 30-year yields were up one basis point at 2.92 per cent, having retreated from late May's record high of 3.18 per cent. The yen strengthened throughout the day, leaving the dollar roughly unchanged on the day around 144.5 yen, while the euro also turned positive, up 0.1 per cent at $US1.1428. The pound dropped 0.3 per cent to $US1.35 after weak UK employment data. Trump's erratic trade policies and worries over Washington's growing debt pile have dented investor confidence in US assets, in turn undermining the dollar, which has already fallen more than eight per cent this year. "It's not that the Americans are blowing up their fiscal situation because the deficit is going to remain more or less stable. But the quality of the deficit has degenerated," said Samy Chaar, an economist at Lombard Odier. "If you invest, and spend on productive investments, you'll get macro payoffs, because you're going to develop an industry, you're going to strengthen your economy, you're going to create jobs, you have a payoff. "If you spend by basically reducing revenues because you cut taxes on people who don't need the money, they won't be consuming more, or investing more, so the macro payoff is more limited." US Treasuries were yielding around 4.45 per cent, down 3.4 basis points on the day. Data on US consumer inflation for May due out on Wednesday could show the impact on tariffs on goods prices. The producer price index (PPI) report will be released a day later. "May's US CPI and PPI data will be scrutinised for signs of lingering inflationary pressures," said Convera's FX and macro strategist Kevin Ford. "If core CPI remains elevated, expectations for rate cuts could be pushed beyond the June 18 FOMC meeting." Traders expect the Fed to leave rates unchanged at its policy meeting next week. Just 44 basis points worth of easing have been priced in by December. In commodity markets, oil prices rose on the back of optimism that Tuesday's US-China talks could ease trade tensions and improve demand for energy, pushing Brent crude up 0.5 per cent to $US67.40 a barrel. Spot gold rose 0.4 per cent to $US3,341 an ounce. Global stocks and the dollar have held steady as trade talks between the United States and China continued into a second day, giving investors some reason to believe tensions between the world's two largest economies may be easing. US Commerce Secretary Howard Lutnick said discussions between the two sides were going well, while President Donald Trump on Monday put a positive spin on the talks after Monday's session. Lutnick, together with Treasury Secretary Scott Bessent and US Trade Representative Jamieson Greer met their Chinese counterparts in London. Any progress in the negotiations is likely to provide relief to markets given that Trump's often-shifting tariff announcements and swings in Sino-US ties have undermined the two economies, disrupted supply chains and threaten to hobble global growth. World stocks, as reflected by the MSCI All-Country World index, traded near record highs on Tuesday while the dollar steadied against a range of currencies. "While market participants are clearly taking a glass half-full view of the outlook, both on trade policy and more broadly, we don't think that should be interpreted as a view that tariffs will be fully unwound," said Jonas Goltermann, deputy chief markets economist at Capital Economics. Goltermann anticipates US duties on Chinese goods to settle at around 40 per cent, while most analysts have said that the universal 10 per cent levy on imports into the United States is here to stay. In Europe the STOXX 600 edged lower, led by UBS whose shares dropped seven per cent as investors worried about the impact of new government proposals to force the Swiss bank to hold $US26 billion in extra capital. US stock futures were trading around 0.1 per cent higher. Meanwhile in Tokyo, Finance Minister Katsunobu Kato said policymakers were looking at measures to promote domestic ownership of Japanese government bonds, a day after Reuters reported that Japan is considering buying back some super-long government bonds issued in the past at low interest rates. The yield on the 10-year JGB was flat at 1.47 per cent, while 30-year yields were up one basis point at 2.92 per cent, having retreated from late May's record high of 3.18 per cent. The yen strengthened throughout the day, leaving the dollar roughly unchanged on the day around 144.5 yen, while the euro also turned positive, up 0.1 per cent at $US1.1428. The pound dropped 0.3 per cent to $US1.35 after weak UK employment data. Trump's erratic trade policies and worries over Washington's growing debt pile have dented investor confidence in US assets, in turn undermining the dollar, which has already fallen more than eight per cent this year. "It's not that the Americans are blowing up their fiscal situation because the deficit is going to remain more or less stable. But the quality of the deficit has degenerated," said Samy Chaar, an economist at Lombard Odier. "If you invest, and spend on productive investments, you'll get macro payoffs, because you're going to develop an industry, you're going to strengthen your economy, you're going to create jobs, you have a payoff. "If you spend by basically reducing revenues because you cut taxes on people who don't need the money, they won't be consuming more, or investing more, so the macro payoff is more limited." US Treasuries were yielding around 4.45 per cent, down 3.4 basis points on the day. Data on US consumer inflation for May due out on Wednesday could show the impact on tariffs on goods prices. The producer price index (PPI) report will be released a day later. "May's US CPI and PPI data will be scrutinised for signs of lingering inflationary pressures," said Convera's FX and macro strategist Kevin Ford. "If core CPI remains elevated, expectations for rate cuts could be pushed beyond the June 18 FOMC meeting." Traders expect the Fed to leave rates unchanged at its policy meeting next week. Just 44 basis points worth of easing have been priced in by December. In commodity markets, oil prices rose on the back of optimism that Tuesday's US-China talks could ease trade tensions and improve demand for energy, pushing Brent crude up 0.5 per cent to $US67.40 a barrel. Spot gold rose 0.4 per cent to $US3,341 an ounce.
