The Greens were once favorites ahead of Germany's 'rollercoaster' election, but not anymore

• At one point earlier this year, the Greens were leading voter polls ahead of the ruling conservative alliance led by outgoing Chancellor Angela Merkel.
• A series of mis-steps and controversies have marred the party's poll rating, however.
• The Green Party is still likely to be part of the next expected coalition government, which is likely to include the Christian Democratic Union and its Bavarian sister party, the Christian Social Union.

Germany's Green Party saw a dramatic shift in its poll ratings earlier this year, going from one of the country's long-standing fringe parties to a serious contender in the forthcoming federal election in September.

At one point the Greens were leading the voter polls ahead of the ruling conservative alliance led by outgoing Chancellor Angela Merkel, which is made up of the Christian Democratic Union and its Bavarian sister party, the Christian Social Union.

But since those heady days in April following the nomination of Annalena Baerbock, the party's co-leader, as its candidate for chancellor, things have gone askew for the party with a high-profile furor around Baerbock. She was accused of plagiarism, failing to declare some supplementary income and of inflating her resume.

For her part, Baerbock has admitted to making errors but has denied any wrongdoing. Her party, as well as her opponents, have also said she has been unfairly treated by the media and has been the victim of sexist coverage, being the subject of erroneous news online and being asked by journalists how she would cope with motherhood and the chancellorship were the Greens to win the election outright.

Such a prospect is looking vanishingly thin now, however, with the Greens slipping in voter polls and having failed to get a boost following devastating floods in Germany which were largely attributed to climate change.

Carsten Nickel, global head of macro at ING, characterized the German election campaign as "a rollercoaster ride for all candidates and parties."

"Up to now, these up and downs have been mainly driven by the popularity or unpopularity and missteps of the leading candidates and not so much by a real debate on content and topics. Baerbock and consequently the Greens have been in a free-fall after the surge in spring. This fall is closely related to a series of blunders and missteps by Baerbock. However, with still more than a month to go a lot can happen," he told CNBC on Tuesday.

Slip in the polls

The election is still all to play for with polls pointing to a rise in support for the center-left Social Democratic Party whose candidate for chancellor is German Finance Minister Olaf Scholz. This puts them in position to contend with the Greens in the next coalition government.

An INSA poll for the Bild am Sonntag newspaper released on Sunday put support for the Merkel's CDU-CSU alliance at 27.5% and support for the Social Democrats at 18%, level with the Green Party.

The pro-business party, the Free Democratic Party, followed with 13%, the poll said, followed by the right-wing Alternative for Germany party seen with 12% of the vote.

"Opinion polls have moved a lot in the past few weeks with support for the Green party on a downward trend since its peak in May. The key beneficiary of this shift has been the CDU/CSU," analysts at UBS noted last week.

"The causes of these shifts in sentiment are many, but the reopening of the economy following Covid-19 restrictions is likely to be a key factor supporting the incumbent party. However, floods that hit the country in July, and a fresh rise in Covid-19 cases has seen this renewed support stall a little, highlighting that the outcome of this election could still yet be influenced by unforeseen events."

Nonetheless, UBS believed a Black-Green (CDU-CSU, Green) coalition remained the most likely outcome to the Sep. 26 election with Armin Laschet being the next chancellor. UBS did not rule out the possibility of a so-called "Jamaica coalition" of the CDU-CSU, Greens and business-friendly FDP, or a "traffic light" coalition made up of the Greens, FDP and SPD, however.

The next chancellor?

The prospect of Laschet becoming Germany's next chancellor is not a given. The leader of the CDU, and state premier of North Rhine-Westphalia, has, like Baerbock, also found himself the subject of controversy after he was caught on camera laughing during a visit to a flood-stricken town in July.

A Twitter storm erupted under the hashtag #laschetlacht — "Laschetlaughs" — and a poll showed a majority of those surveyed viewed his actions negatively. Laschet later apologized.

Greg Fuzesi, an economist at JPMorgan, said both Baerbock and Laschet faced "personal difficulties" that could impact their vote share, and that SPD candidate Scholz could be a contender to lead Germany.

"The personal problems faced by Laschet and Baerbock have been significant drivers of the recent polls … The Greens' slide is significant as it potentially opens up the door to Finance Minister Olaf Scholz leading a 'traffic light' coalition as Chancellor, together with the Greens and FDP. This requires the SPD to outperform the Greens, which looks possible again," he noted.

While this may work for the Greens, the FDP would likely prefer a "Jamaica coalition" with the CDU-CSU and Greens, Fuzesi noted.

"The reason is that centre-right parties (CDU/CSU and FDP) would have a bigger weight in this coalition, allowing the FDP to push through more of its policies. This points to complicated tactical considerations after the election, with parties potentially pursuing a number of coalition talks in parallel."

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