Resolution criteria

The market resolves YES if the CDU/CSU-SPD coalition government completes its full 4-year term from 2025 to 2029. The market resolves NO if the government dissolves before the end of 2029, triggering early elections or a change in the governing coalition through other constitutional means. Resolution will be determined by official announcements from the German Federal President or Bundestag regarding the dissolution of parliament or a change in government.

Background

The 2025 election took place seven months ahead of schedule due to the 2024 collapse of the Scholz governing coalition. On 9 April 2025, the CDU/CSU and SPD secured a ruling coalition agreement, and the German parliament elected Friedrich Merz as chancellor on 6 May 2025. A grand coalition between the two parties secured a relatively thin majority of 52% of seats, making it a narrow governing coalition. The coalition is the only possible two-party majority that excludes the AfD, whose support has surged on a nativist, anti-migration agenda.

Considerations

German coalitions have historically faced stability challenges. The previous grand coalition lasted until 2009, and after the 2017 election, coalition negotiations initially failed before a fourth grand coalition was ultimately formed. The current CDU/CSU-SPD coalition operates with a slim 13-seat majority, leaving limited room for defections or parliamentary surprises. Economic challenges, geopolitical pressures, and internal policy disagreements between the two parties could strain the coalition's durability over a four-year period.