Merkel may face new coalition with anti-euro party

German Chancellor Angela Merkel's Christian Democrat party may face a new coalition as recent polls show that their Bavarian sister party is only just above the 5% threshold for staying in parliament.

Uncertainty over whether German Chancellor Angela Merkel will continue with same coalition. Credit: ITV News

Should the Free Democrats (FDP) fail to be re-elected, Ms Merkel may be forced into a "grand coalition" with the Social Democrats (SPD), like her first government of 2005-2009.

Such uncertainty would affect weaker economies on the euro zone's "periphery", pushing up yields on the likes of Spanish and Italian debt relative to Germany's, the euro zone benchmark.

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