Not even the atmosphere of global uncertainty that followed Donald Trump’s re-election could stop Germany’s coalition government from collapsing on Wednesday evening. On 6th November Chancellor Olaf Scholz announced that he was sacking his finance minister, Christian Lindner, to “avert damage” to the country. Germany is likely heading for new elections.
The so-called “traffic light” coalition of the social democratic SPD, the Greens and the liberal pro-business Free Democrats (FDP) has been in office since the end of 2021, and elections were not scheduled until September 2025. The first coalition with these partners at federal level, it was expected to be a breath of fresh air after 16 years of Christian Democrat-led government, headed by Angela Merkel. The promise of the three-party alliance: “Daring more progress.”
The coalition was already on shaky ground. At the end of 2023 the constitutional court ruled that reallocating leftover pandemic funds to the climate transition was unconstitutional. Time and again, the three parties had to find compromise on how to deal with the hole in Germany’s budget and issues such as the environment and energy transition. On top of that, the coalition parties fared poorly in recent state elections, showing the growing dissatisfaction for the government among the German public.
For months, however, the possibility of a break-up had been hovering over the coalition. The parties were at odds, particularly over a new budget and differing visions of economic policy. In an 18-page document that might go down in German history as “divorce papers”, Lindner, leader of the FDP, proposed a turnaround of the coalition’s economic policy a week ago. The SPD and Greens did not want to give in to the demands, especially as the proposed changes in social and climate policy would have contradicted core beliefs of their centre-left parties. Scholz is reported to have demanded an emergency resolution and thus the suspension of the so called “debt brake”, a debt ceiling enshrined in constitutional law that prohibits the state from taking out extra loans unless there is an emergency. Lindner is known for advocating a strict adherence to the debt ceiling. It became clear that the coalition parties could not agree on a compromise.
In his speech Scholz directly attacked his finance minister. Lindner had too often “blocked laws in an unrelated manner” and engaged in “petty party-political tactics.” Scholz said: “Too often he has broken my trust... Serious government work is not possible like this.” Scholz accused Lindner of focusing on his own clientele and the short-term survival of his own party. He said: “Especially today, one day after such an important event as the elections in America, such selfishness is completely incomprehensible.”
Shortly after, the battle over interpretation began. The FDP had presented “proposals for an economic turnaround to put our country back on the road to success,” Lindner said. Scholz had long failed to recognise that the country needed a “new economic awakening”. The chancellor had trivialised the economic concerns of ordinary citizens.
Instead, according to Lindner, the chancellor ultimately demanded that the “debt brake” be suspended. It is reported that Scholz wanted to take on more debt, referring to the impact of Russia’s war in Ukraine. “I couldn't agree to that because I would have violated my oath of office,” said Lindner. Lindner accused Scholz of no longer being interested in an agreement that was viable for everyone, but rather “a calculated break of this coalition”.
On Thursday morning, the FDP minister for digital affairs and transport, Volker Wissing, announced that he would quit his party but wanted to keep his office and remain part of the coalition. The remaining FDP cabinet members have vacated their posts.
When Germany will go to the ballot box is now uncertain. Scholz wants to continue in a minority government with the Greens. He argues that important projects still need to be passed before an election, such as stabilising the pension system, new EU asylum system and measures to stimulate industry. The problem is that he would need support from the opposition parties.
On Friday afternoon Scholz showed willingness to negotiate on the date for new elections. “We should discuss the date as calmly as possible,” he said. Scholz originally planned to only call a vote of confidence in the Bundestag on 15th January. If, as expected, he does not receive a majority, elections would likely follow. According to Scholz, they could take place by the end of March.
Opposition politicians had pressed the chancellor to move quicker. Friedrich Merz, leader of the CDU opposition and the likely next chancellor, has called on Scholz to trigger a vote of confidence next Wednesday. The situation in Germany and the world was “too serious for a minority government”, he said, the day before. There are also fears that the government might become a “lame duck”, operating without a stable government on the international stage.
Scholz’s speech on Wednesday sounded in parts like a candidature speech for re-election. Robert Habeck is expected to announce his candidacy to become chancellor for the Greens today. However, Merz is likely to benefit most from the coalition’s collapse. In a recent poll, his CDU is ahead with 34 per cent of public support, followed by the far-right Alternative for Germany (AfD) on 17 per cent and Scholz’s SPD on 16 per cent. The Greens scored 11 per cent, and the populist leftist Sahra Wagenknecht Alliance 6 per cent. Lindner’s FDP could have difficulties entering parliament at all. The best hope for Scholz and the SPD seems to be a return to government as junior partners.
