German Chancellor Angela Merkel Thomas Lohnes

The next leader of Germany is in focus following the announcement Monday that Annegret Kramp-Karrenbauer, the head of the Christian Democratic Union (CDU), will stand down from the party leadership and not run for the position of chancellor. Kramp-Karrenbauer was widely seen as the chosen successor to Chancellor Angela Merkel, due to step down from the German leadership in 2021, but a series of electoral misses, divisions over the party's direction and an apparent lack of authority prompted the CDU leader and defense minister to step down. A leadership race is expected to take place in summer and there are already possible contenders for the role, including several that lost out to Kramp-Karrenbauer in the party leadership election in December 2018. Friedrich Merz (who was narrowly beaten by Kramp-Karrenbauer in the leadership vote), current Health Minister Jens Spahn and the state premier of North Rhine-Westphalia, Armin Laschet, are seen as front-runners in a forthcoming leadership race. Markus Söder, the head of the CDU's Bavarian sister party, the Christian Social Union (CSU) and the CDU's Daniel Günther or Raplhp Brinkhaus are candidates with an outside chance, analysts say.

The favorites

Friedrich Merz, the pro-business, vice president of the CDU's Economic Council and a favorite for the CDU leadership, made no reference to the news of Kramp-Karrenbauer's departure but tweeted Monday that falling industrial production figures for Germany were a "warning sign" and that "now would be the right time to stimulate economic and financial policy measures," he said. "The purchasing power of private households could be increased with a reduction in the tax burden, as could the investment power of companies," Merz, a corporate lawyer and millionaire, noted. Florian Hense and Holger Schmieding, economists at Berenberg Bank, noted Monday that the favorites to replace AKK as party leader are Merz and Laschet. Laschet's experience as state prime minister of North Rhine-Westphalia would make him well suited to lead a coalition with the Greens. "He would be a candidate of continuity – which could not only be an advantage. Many in the party may regard him as too close to Merkel, though," they noted. Merz, meanwhile, they noted, is "well supported by those in the CDU base who look for a bigger change after Merkel's reign. Having come only narrowly behind AKK in late 2018, he may have a slight advantage over Laschet who did not run at the time. He may be better suited to take on the right-wing AfD than the other candidates."

Traditionalists Vs. Centrists

Analysts note that Kramp-Karrenbauer, a protegee of Merkel seen as continuing her political direction, had failed to unite a party riven with division over whether to assert its traditional, Conservative values or to remain more centrist, as it has been under Merkel and AKK. But Jens Spahn – aged 40, gay and staunchly Conservative (and a contender for the leadership) paid tribute to Kramp-Karrenbauer, saying he had "great respect for this unexpected decision" and that she had brought the party together. "The separation of party leadership and chancellery was a difficult situation. It is AKK's credit for bringing the CDU and CSU together again. The cohesion of our party must now be our guiding principle," he said. Assessing the top candidates for the CDU leadership, J.P. Morgan Economist Greg Fuzesi said that a "new CDU leadership election may produce a less Merkel-friendly and a more fiscally-conservative leader" such as Friedrich Merz, given that Kramp-Karrenbauer was essentially an ally of Merkel. "But, in any case, the process of replacing Kramp-Karrenbauer will involve heated and divisive debates within the CDU about the party's direction and perhaps reduce the likelihood of significant new policy initiatives by the German government in the meantime. Other parties also still face pressures, with the new leadership team of the SPD having failed to have any impact on the polls. Hence, new elections cannot be ruled out at some point." Franca Wolf, Europe analyst at global risk consultancy Verisk Maplecroft, said that Spahn and Laschet would likely continue Merkel's centrist direction, while victory for Merz would signal a return to the CDU's "more traditionally conservative roots."

Disunity