Germany Teeters on the Edge: Coalition Collapse Unleashes Perfect Storm of Uncertainty

The collapse of the coalition cabinet plunges Germany into uncertainty

(AFP, Berlin, 6th) German Chancellor Scholz fired Lindner, Finance Minister of the Liberal Democratic Party, today The three-party coalition cabinet has collapsed, and an early election is likely to be held in March next year. On the same day that Trump won the US election, Germany, Europe’s largest economy, will undoubtedly enter a period of high political uncertainty.

Olaf Scholz must reassure the EU countries at the EU summit in Budapest. He announced today that he will submit a vote of confidence to the Bundestag (the lower house of the German parliament) on January 15 next year If the vote of confidence fails, he can formally ask the president to dissolve the Bundestag within 21 day and hold a new election within 60 days. As a result, the federal parliamentary election will be brought forward from September next year to March.

Scholtz also said today that he would contact Friedrich Merz, the leader of the conservative Christian Democrats (CDU), the largest opposition party, to try to pass some important economic and defense bills. The Christian Democrats are currently at the top of the polls.

The three-party coalition cabinet established in 2021 is called the “traffic light alliance” with the red represented by the Social Democratic Party (SPD), the green represented by the Green Party, and the yellow represented by the Free Democratic Party (FDP). ). However, there have been many disagreements in the policy field since the beginning of the road, and now is not even the time to disintegrate. Germany, Europe’s largest economy, is likely to experience negative economic growth for the second consecutive year this year.

Holger Schmieding, an analyst at Berenberg Bank, wrote: “The coalition cabinet collapsed after failing to complete its term, which left Germany somewhat leaderless at this particularly difficult moment after Trump won the election.”

The last straw for the coalition cabinet was the dispute over the budget. To fill the huge gap in next year’s budget, Xiaoz’s Social Democratic Party and the Green Party favor taxation and borrowing, but the Liberal Democratic Party is pursuing a “debt brake”. In order to implement a balanced budget, the German constitution states that the debt brake can only be exempted under special circumstances.

Scholz said he offered a plan to Christian Lindner which included lowering energy costs, increasing investment in German companies, securing jobs in the car industry and continuing to support Ukraine, but Lindner, a fiscal hawk, rejected him as he could not do this last resort.

Maize, the leader of the Christian Democrats who has long advocated early elections, has been criticizing the coalition cabinet, Markus Soeder, leader of the Christian Democrats’ sister party in the southern state of Bavaria, the Christian Socialist Party (CSU), is calling for an immediate vote of confidence and opposed any technical delay.

Recent opinion polls show that the CDU/CSU alliance’s support rate is around 32%, which is higher than the Social Democratic Party (SPD)’s 16%, the Green Party’s 11%, and the Liberal Democratic Party’s 4% combines the coalition cabinet.

The far-right Alternative for Germany (AfD) also has a support rate of up to 20%, but all other parties currently refuse to cooperate with the AfD.

This also means that, according to current opinion polls, even if the Christian Democratic Party wins the election, it may need to cooperate with the Social Democrats, the Green Party, or even both to form a government with a majority.