Differences over economic policy and the liberals’ repeated challenges to Social Democratic Chancellor Olaf Scholz have precipitated the breakup of the government coalition in Germany this Wednesday. Chancellor Scholz has announced the expulsion of the Minister of Finance, the liberal Christian Lindner, who a few days ago had demanded a radical change from his partners with massive spending cuts and tax cuts. The end of the so-called traffic light coalition – due to the colors of its partners: red, green and yellow – leads Europe’s leading economy to early elections. Predictably, in March.
The breakup of the coalition opens a period of instability in Germany at an inopportune time, after Donald Trump’s victory in the United States and with the economy in recession for the second consecutive year. But the partners, who had governed together since 2021, have concluded that the first tripartite since the post-war was unsustainable and could not last until the date scheduled for the end of the legislature, in autumn 2025.
In an appearance before the press in the chancellery, after nine at night, Chancellor Scholz accused his minister Lindner of breaking with his blockades and constant demands, and added: “It is not possible to govern seriously like this.” In Germany it is not easy to dissolve Parliament and bring forward elections, so the chancellor’s way of doing so is to present a motion of confidence and lose it. The chosen date, according to the head of Government, is January 15, which would place the date of the electoral call in the month of March. It remains to be seen how a minority government, as it will be after the departure of the liberals, will be able to approve the 2025 budget in the Bundestag.
The government crisis is reminiscent of that of 1982, when the liberals, also for reasons of economic policy, abandoned the coalition with Helmut Schmidt’s Social Democrats, and made the Christian Democrat Helmut Kohl chancellor.
The news has come at the end of a meeting between the leaders of the coalition. For days, speculation had been circulating in Berlin about a possible fall of the traffic light coalition. But Trump’s victory this Tuesday had fueled the hypothesis that perhaps the decision would take longer. It might be thought that the change in the White House would advise against opening a period of uncertainty in Europe’s leading economy, the economy in decline, the industry burdened by the loss of competitiveness and in the middle of the war in Ukraine.
It hasn’t been like that. The partners—Scholz by expelling Lindner, but also Lindner by challenging Scholz—have concluded that it was better to end the traffic light now than to prolong the agony.
In a tense meeting in the Chancellery, Lindner proposed early elections, so that a budget could be adopted and then, in an orderly manner, end the legislature that began in 2021 and must end next fall. Scholz seemed willing to come around to some of his minister’s demands. But, according to Lindner, he also demanded the suspension of the debt brake, the constitutional limit on debt that makes it difficult for Germany to make investments that social democrats and environmentalists consider urgent. Finally, he considered that the challenges of the liberal, the coalition’s junior partner, exceeded the limits. and said Enough.
“Scholz understood that Lindner was a player and that he could not guarantee the stability of the Government with such a partner,” social democratic deputy Nils Schmid told Morning Express upon hearing the news. “It is a sign of leadership from the chancellor, because he has not let Lindner get away with it,” he concludes.
The distance between social democrats and environmentalists, on the one hand, and liberals on the other, was excessive. The coalition included supporters of responding to economic stagnation and the industrial crisis with a reinforcement of the State (the SPD of Scholz and the Greens of the Ministers of Economy, Robert Habeck, and Foreign Minister, Annalena Baerbock) and supporters of reducing the weight of the State and regulations, including environmental ones (Lindner’s FDP).
Tonight’s meeting was about seeking joint solutions to the economic crisis and the hole of more than 13 billion euros in the budget. But the internal debates opened since Lindner presented a document to his partners last week titled Economic turn in Germany which showed the distance that separated them. The distance is not new: it has been a reality since the coalition was formed three years ago at the end of Chancellor Angela Merkel’s 16 years. And it was not the first crisis at the traffic light.
But now, with a deteriorated economic situation, an evident paralysis in the Government to find answers and the prospect of 11 more months of lawsuits and blockades, they accelerated the end of the experiment. There is a clear electoral calculation, too, beyond political differences. Lindner and the Liberals, who could be left out of the Bundestag after the elections, have possibly thought that they can capitalize at the polls on their initiative to relaunch the economy and their role in the fall of the unpopular Government. The FDP’s idea is to seek an alliance with the Christian Democrats of Friedrich Merz, the favorite to succeed Scholz, according to polls.
