While still celebrating its historic gains in yesterday's German general election, the right-wing nationalist party Alternative for Germany (AfD) was delivered a bombshell this morning as its co-head announced her departure.
Frauke Petry, a more moderate member of the party, walked out of a press conference and later declared she would not sit with AfD in the Bundestag. The party won 12.6 per cent of the vote and 94 seats, making it the third largest in the Bundestag.
The departure of Petry, who said as she left that AfD must address dissent within its own ranks, highlights the divide in the party.
Petry had attempted to unite the AfD and lead it towards a more “realistic and pragmatic” approach, in the hope that this would give it a chance to enter into coalition governments.
But her co-leader Jorg Meuthen and the party's leading election candidates, Alexander Gauland and Alice Weidel, dismissed these ideas. Instead, they focused on acting as an anti-immigrant opposition force to the other parties in the Bundestag.
German stocks cautiously edged up today in the wake of Merkel's win with the Christian Democratic Union (CDU). The country's DAX index ended the day up slightly, at 0.02 per cent, while the euro dropped against the dollar to $1.184. The euro's weakening caused sterling to gain against the currency, ending the day worth €1.137.
Oliver Jones, analyst at Capital Economics, noted there were valid reasons why any market damage was limited.
“First, despite the headlines, the result was hardly a bolt from the blue. Although the CDU fared a little worse than opinion polls had suggested, it was never expected to garner enough votes to govern without the support of others,” he said.
“Second, notwithstanding AfD’s rise, the result is unlikely to mark a major shift in economic policy in Germany. The most likely outcome appears to be a coalition between the CDU, Greens and Free Democratic Party (FDP).
While the parties differ in the details of their tax and spending proposals, they are all committed to balancing the budget.