By James Paul
The closest election result in recent history has left Germany's pensions and other wider economic reforms in the balance, according to observers within the country's financial services industry.
"It's unsatisfying. We've called for pensions and other reforms, and developed channels of dialogue. But it's unclear now how we move forward," said Andreas Fink, spokesman for the Bundesverband Investment und Asset Management, Frankfurt, an organization representing the country's fund management industry.
In the Sept. 18 vote, the incumbent Social Democrat Party led by Chancellor Gerhard Schr%F6;der received 34.3% of the vote, narrowly behind the Christian Democrat Party, with 35.2%, forcing both into coalition talks with small parties.
According to Dietrich Brauninger, economist at Deutsche Bank, Frankfurt, no matter which groups make up the government, pension reforms are unlikely to take a high priority. "Whichever parties are involved, we will not have a particularly stable government," he said. "It will only be able to tackle the most urgent of problems." The DAX index of leading German stocks fell 2% after the election, with insurance companies — the likely beneficiaries of a more privately oriented pensions policy — leading the decline.