Germany’s fractious coalition falls apart—and how!

EARLY IN THE morning of November 6th, as Europe digested the result of America’s presidential election, three senior figures in Germany’s government were huddling for crisis talks in Berlin. But Olaf Scholz, the chancellor, Robert Habeck, the vice-chancellor, and Christian Lindner, the finance minister, were not sketching a response to Donald Trump’s promised tariffs, or working out how Germany might compensate for a loss of American support to Ukraine. Instead, they were deciding whether to blow up their fraying coalition.

Barely 12 hours later, it was all over—and how. In a blistering speech delivered after last-ditch coalition talks fell apart Mr Scholz, from the Social Democrats (spd), eviscerated Mr Lindner, head of the pro-business Free Democrats (fdp), for his “completely incomprehensible egotism” and for “breaking my trust”. He fired Mr Lindner, announced a parliamentary vote of confidence in January, and said he expected that an election that had been due next September would be brought forward to March. Thus does one of the most unpopular governments in modern German history reach its ignoble end.

The three parties in the “traffic-light” coalition, which took office in 2021 promising to modernise the country, long ago ran out of patience with each other. But the proximate cause for the collapse was a set of demands for changes to tax, social and climate policy issued by Mr Lindner at the end of last week. Economists welcomed some of them; Germany’s stagnant economy desperately needs a reboot. But Mr Lindner, whose party was the smallest of the trio, will have known that his proposals were impossible for the spd and Mr Habeck’s Greens. His paper looked like a pretext to quit the government. In response Mr Scholz sought a compromise that would have obliged Mr Lindner to agree to a suspension of Germany’s deficit-limiting “debt brake”—a red line for the fdp—in part to enable more support for Ukraine. When his minister balked, Mr Scholz pushed him before he jumped.

Few will mourn the end of Mr Scholz’s unloved coalition. Yet the chancellor’s move raises at least as many questions as it answers. Chief among them is how Germany will pass a budget for 2025. With a financing gap of around €8bn-9bn ($8.6-9.7bn) to plug, it was already unclear how the Bundestag would meet its deadline of November 14th. Now, without a functioning majority, Mr Scholz may have to strike a deal with the opposition Christian Democrats (cdu). Mr Scholz said he also hoped to work with the cdu to pass other measures, including on pensions and migration, before the Christmas break.

Yet Friedrich Merz, head of the cdu, does not want to dance to Mr Scholz’s tune. The morning after the coalition’s collapse he said the confidence vote should be brought forward to next week. The cdu has long pushed for early elections; polls suggest that it, along with its Bavarian sister party, would win them comfortably, elevating Mr Merz to the chancellery, albeit probably at the head of another awkward coalition. As The Economist went to press Mr Merz was due to meet Frank-Walter Steinmeier, who as Germany’s president has the tricky task of piloting the country through its coming constitutional turbulence. The path ahead remains uncertain.

Meanwhile, the governing parties will prepare for battle. Mr Lindner hopes voters will reward his gamble, lifting his ailing party above the 5% threshold needed to enter parliament and presenting it as a credible coalition partner for Mr Merz. Mr Habeck, who will soon declare his candidacy for the chancellorship, will try to boost his party’s sagging spirits, and heal an emerging rift between its moderate and radical wings. And Mr Scholz, one of the least popular chancellors of modern times, will have to convince spd mps that his own candidacy will not lead them to electoral oblivion. All will hope that the political chaos does not play into the hands of two fringe outfits, the hard-right Alternative for Germany and the new “left-conservative” Sahra Wagenknecht Alliance.

The experience of managing a three-party coalition—very unusual at federal level—has been a “nightmare”, sighs one senior spd official. In fact the government performed better than its reputation might suggest. It has managed an energy crunch and passed important social and climate reforms. And for all that some allies hoped Mr Scholz might do more, his government remained a generous and steadfast supporter of Ukraine. (For his part, Mr Merz has promised more robust backing for Volodymyr Zelensky.)

Yet as time went by the government proved incapable of marshalling a proper response to Germany’s economic rot. The debt brake began to bite as revenues fell and spending pressures mounted, rendering unbearable the ideological differences between the fdp and its progressive partners. The traffic-light coalition was the first casualty of a political fragmentation in Germany that has made the business of forming coherent coalitions devilishly difficult. It may not be the last.