Germany's government has collapsed after Chancellor Olaf Scholz sacked finance minister Christian Linder, leading the latter to withdraw his party from the ruling coalition. An election looks likely in early 2025.
The decision came after days of political negotiations within the government coalition, consisting of the Scholz's Social Democratic Party (SPD), the Green party and Linder's liberal Free Democratic Party (FDP), about how to finance the budget for 2025 and on ways how to tackle the economic downturn in Germany. The SPD and the Greens wanted to take on new debt to finance, while FDP did not agree on an exception to the so-called debt brake.
This provision states that government projects cannot be financed through a structural increase of debt, with three exceptions: war, environmental catastrophes or economic depression.
Scholz said that an agreement seemed impossible — notably he highlighted Linder's desire to cut investment in "climate-friendly modernisation". He will ask for a confidence vote on 15 January, which in turn could lead to elections in March 2025, six months earlier than planed.
Lindner said his party made a proposal that included decreased bureaucracy, tax reliefs and "pragmatic" climate and energy policies. But he said an agreement to an exception to the debt brake would have meant a betrayal of his oath of office and FDP would be leaving the coalition to stick to its core values.
The SPD's Jorg Kukies, an adviser to Scholz, will become finance minister. Until his formal appointment this position will be held by Green party leader Robert Habeck.
The SPD and Greens plan to rule as a minority government until the confidence vote. They plan to bring all remaining legislation to parliament and try to garner support for each project from opposition parties.
The leader of the largest opposition party, the Christian Democratic Party (CDU), Friedrich Merz asked Scholz to hold the confidence vote as soon as possible, optimally at the beginning of the coming week. He said the government coalition failed and they should allow citizens to decide how to proceed.
The three government parties have been at odds since they came into office almost three years ago, and the legislative period was characterised by constant squabbles and leaks of internal discussions and documents to the German press.
