The next German government faces calls to loosen borrowing rules, slash energy costs and spur innovation. It won’t be easy.

Germany's opposition conservatives CDU/CSU won the national election on Sunday, putting leader Friedrich Merz on track to be the next chancellor while the far-right Alternative for Germany (AfD)came in second,

Investor confidence rose this month on hopes that a change in government at elections on Feb. 23 could spur a reversal of economic fortunes.

Polls are open across Germany as the world’s third largest economy chooses a new leader to guide it through an era of febrile immigration debates and souring relations with Washington.

But the biggest relief is that the center-left SPD won enough seats in the Bundestag to be able to form a two-party governing coalition with the conservative CDU.