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Enron Mail |
Vote of confidence on Schr?der's government today
The vote of confidence in the German lower house of parliament, the Bundestag, is scheduled to take place at 11.00 GMT today, the result should be out 15 to 20 minutes after that. In test votes in the government coalition's factions this morning, only four Greens voted against the government. As there was one defection from the SPD faction yesterday, but all other SPD MPs voted for the government, Chancellor Schr?der looks set to win the vote of confidence, but it is a very tight race. Schr?der needs 334 yes-votes of the 666 total votes in the Bundestag and is likely to get 336 according the tests this morning. If he loses, Schr?der has three options: 1) Form a coalition with the liberal FDP until the federal election in the autumn of next year, 2) remain in the seat with a minority government and hope on support from other parties for the remaining issues of the term, 3) ask the President of the Federal Republic to dissolve Parliament and call new elections. We feel that options 3) is the most likely of these options, 1) has a decent probability as well but 3) is unlikely. It is possible that the market appreciates the outlook for a more conservative government and plays ideas like earlier tax cuts and/or cancellation of the scheduled hike in energy taxes if Schr?der fails. However, we believe that there will be little change in politics, especially in economic issues, as the budget is very tight. So hopes for more fiscal stimulus should be short-lived if they occur at all. There is in any case going to be more uncertainty if Schr?der fails which is never good news, but which should also have only a limited impact on financial markets. _______________________________________________ Holger Fahrinkrug Senior Economist UBS Warburg AG Stephanstra?e 14-16, D-60313 Frankfurt, Germany Tel. +49 69 1369 8280 Fax +49 69 1369 8221 Email: holger.fahrinkrug@ubsw.com Visit our website at http://www.ubswarburg.com This message contains confidential information and is intended only for the individual named. If you are not the named addressee you should not disseminate, distribute or copy this e-mail. Please notify the sender immediately by e-mail if you have received this e-mail by mistake and delete this e-mail from your system. E-mail transmission cannot be guaranteed to be secure or error-free as information could be intercepted, corrupted, lost, destroyed, arrive late or incomplete, or contain viruses. The sender therefore does not accept liability for any errors or omissions in the contents of this message which arise as a result of e-mail transmission. If verification is required please request a hard-copy version. This message is provided for informational purposes and should not be construed as a solicitation or offer to buy or sell any securities or related financial instruments.
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