"Dramatic" - Germany's Merz Falls Short In Chancellor Vote As Political Turmoil Unfolds, New Vote Imminent

Germany's blue-chip DAX 40 index fell nearly 2% after a political crisis erupted in Berlin, triggered by conservative leader Friedrich Merz's failed bid to become the country's 10th postwar chancellor. 

Merz needed 316 votes out of 630 to secure the chancellorship but received only 310, falling short of a majority despite his coalition holding 328 seats. Because the vote was conducted by secret ballot, the identity of those within his own party who defected remains unknown. 

Since the end of World War II, a candidate for chancellor has never failed to win on the first ballot. 

While the conservative leader is still expected to take charge of a ruling coalition of his CDU/CSU bloc and the Social Democrats, it was the first time since World War II that an incoming chancellor failed to secure backing from lawmakers in the first round of voting in the Bundestag and triggered chaos in Berlin's government quarter. -Bloomberg

Manfred Güllner, head of the Forsa polling group, told The Wall Street Journal this outcome is "dramatic," adding, "Even if Merz makes it in a second round, he is now damaged." 

The immediate response in local markets was a 1.8% drop in DAX 40. German bonds trimmed declines, with the 10-year notes trading as low as 2.52% versus 2.55% before the vote. 

A headline that just crossed Bloomberg moments ago indicated that the German Parliament will reconvene at 3 p.m. local time. 

• GERMAN PARLIAMENT TO RECONVENE AT 1500 LOCAL TIME, 1300 GMT, ON TUESDAY AFTER FAILURE OF FIRST VOTE ON CHANCELLOR - N-TV

German reporter Julius Betschka wrote on X, "The next round of voting is scheduled for 3:15 p.m., according to @sternde info from both factions. Faction meetings beforehand."

AP News provided color on what's next:

The lower house of Parliament — called the Bundestag — has 14 days to elect a candidate with an absolute majority. Merz can run again, but other lawmakers can also throw their hat in the ring. There is no limit to the number of votes that can be held within the two-week period.

If Merz or any other candidate fails to get that majority within the 14 days, the constitution allows for the president to appoint the candidate who wins the most votes as chancellor, or to dissolve the Bundestag and hold a new national election.

The head of the Alternative for Germany party, Alice Weidel, wrote on X that "this demonstrates what a weak foundation" Merz was built on. 

"As AfD, we have set out to turn this country upside down. We are ready to take on government responsibility. And we call for reason to prevail. Mr. Merz should step down immediately. The path should be cleared for new elections in our country," Weidel said. 

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