As seen in – Markets surge after worst month since the financial crisis – business live

Stefan Koopman, market economist at Rabobank, notes that after the initial shock caused by Merkel’s announcement, the market reaction to the financial crisis has been relatively muted as she also said she would like to see her term through to 2021.

The CDU is suffering heavy losses in state elections and the opinion polls indicate there is no improvement in sight. It will now be increasingly difficult for her to stay on as Chancellor, and having shown signs of weakness, the wolves may come for her sooner rather than later. Germany has been a cradle of political stability over the last decade, but this now looks to be over. Ms Merkel has been a driving force in Europe, leading the response to major political and economic upheaval like the Eurozone debt crisis. What now remains to be seen is whether her CDU successor has the political will and gravitas on the European stage to hold it together in these testing times. With Brexit imminent and growing controversy around the Italian government’s spending plans, there couldn’t be a worse time for Germany’s steady ship to hit choppy waters. This implies more financial market volatility going forward and is another reason to remain bearish about the euro.

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