German coalition government collapses, early election expected in March

The German governing coalition has collapsed after leaders of the three parties in government failed to patch up their differences on Wednesday night.

German Chancellor Olaf Scholz fired Finance Minister Christian Lindner, who leads the liberal Free Democrats, saying that he had “betrayed his confidence”.

Lindner accused Scholz of “leading Germany into a phase of uncertainty”.

The Free Democrats were part of the three-way coalition, dubbed as the ‘traffic lights’ coalition, along with Scholz’s centre-left Social Democrats and the environmentalist Greens. The coalition has been in power since 2021.

Scholz said he will be calling a vote of confidence in his government on 15 January, a move that will likely pave the way for an early election in March instead of September when it was due.

Without support from the Free Democrats, the remaining partners in the coalition do not have a parliamentary majority.

Economy Minister Robert Habeck of the Greens said the party would not quit the government and its ministers would remain in office.

Internal tensions had been bubbling for weeks before exploding into the open on Wednesday night, plunging Europe’s largest economy into political chaos.

The breakup came hours after Donald Trump was confirmed as the next US president, triggering uncertainty about the future of the EU’s economy and security.

When the coalition was formed in 2021, each party planned to spend big on its own individual core interest groups.

However, Russia's invasion of Ukraine in 2022 sent energy prices surging, and left Germany facing an increase in defence spending. Budgetary plans were also disrupted after a German court ruled that plans to shift emergency money raised during the COVID pandemic to a climate fund were illegal. The ruling blew a €60 billion hole in the government’s finances, forcing significant spending cuts across the board.

Germany is facing its second year without economic growth. The Social Democrats and the Greens want to tackle this by loosening constitutional rules on public debt to allow more spending. The Free Democrats want to pay for tax cuts by slashing welfare and social budgets and pushing back environmental targets.