AKK’s downfall was ultimately triggered when the CDU in Thuringia voted alongside the AfD to elect a state premier last week. Local leader Mike Mohring has been forced to back track, but other CDU officials in the east have signaled sympathy for his maneuver as he tries to maintain support for the party.

The CDU’s flirtation with the AfD is “very worrisome,” said Norbert Walter-Borjans, the co-leader of the Social Democrats, Merkel’s junior coalition partner, which is also searching for a candidate to lead its next national election campaign.

AKK told party colleagues at a meeting in Berlin that one reason for her decision is the unclear relationship between parts of the CDU and the far-right AfD and the anti-capitalist Left party. At a press conference in Berlin, she underscored her stand that the CDU needs to be strictly opposed to any cooperation with the two fringe parties.

Eoin Treacy's view

So is the enemy of my enemy my friend or not? The far- left Die Linke party secured the most votes but the far right AfD supported the CDU candidate instead of its own to ensure Die Linke were defeated.

The primary issue at stake which seems to only now be dawning in Germany is that the coalition cobbled together after the last election, pairing the centre-right CDU with the centre-left SPD leaves them wholly exposed to the machinations of resurgent populist parties. This merger of the centre against the peripheries of politics strikes me as akin to Custer’s last stand where disparate tribes are amassing to overwhelm the centre.

Merkel's coalition now looks on shaky ground. The reality is a new election is not going to fix the fact that the centrist parties do not have the numbers to secure power. The next election is only going to further expose that issue. Anyone who thinks Germany is incapable of fiscal stimulus needs to keep a close eye on electoral math. The answer of every other government to this kind of challenge has been to boost spending and there is no reason to believe Germany will not do the same.

Interestingly, Deutsche Bank has been the best performing share in Germany so far this year. It broke out in the first week of January and continues to extend the move.

Turning to Irish politics, those debating what form the next government will take should pay close attention to the German case study. Refusing to work with a party that has been duly elected gives them a free rein to act as an aggrieved party in opposition. That greatly enhances their potential to become the party of power in the next election.

The other side of that argument is accepting upstarts into coalition, where they have to make concessions in order to rule, blunts their message while the larger party co-opts their policies. If history is any guide they tend to be eviscerated at the next election. That is what happened to the Liberal Democrats in the UK and to the Labour party in Ireland. That pretty much ensures Sinn Fein and some measure of its communist manifesto will find its way into the next Irish parliament.