Germany’s coalition falls: Snap elections loom

Scholz ousts finance minister Lindner, blames ‘selfishness’ as economic policy disputes reach boiling point

Germany's coalition government fell apart on Wednesday as Chancellor Olaf Scholz dismissed Finance Minister Christian Lindner, setting the stage for a potential snap election amid political upheaval in Europe's largest economy.

Scholz now plans to lead a minority government with his Social Democrats and the Greens, relying on shifting parliamentary alliances to pass laws. He will hold a parliamentary confidence vote on 15 January, which could lead to elections by March if unsuccessful.

Scholz appealed to opposition leader Friedrich Merz for support on key issues like the budget and military funding, with Merz scheduled to respond on Thursday. The breakdown of Scholz’s three-way coalition follows months of disputes over Germany’s economic direction, with waning government popularity and rising influence from far-right and far-left groups.

In a statement, Scholz criticised Lindner, of the Free Democrats (FDP), for prioritising party interests and obstructing economic legislation, calling his actions "selfish."

Scholz’s move coincides with Republican Donald Trump's recent US election victory, which has stirred European leaders to find common ground on key issues such as potential new US tariffs, Russia’s war in Ukraine, and NATO’s future.

Germany’s economic challenges, including stalled growth, infrastructure issues, and military unpreparedness, underscore the urgency of stable leadership.

Scholz’s proposals to cap energy costs for businesses and support the auto industry, alongside a €15 billion aid package for Ukraine, contrasted sharply with Lindner’s fiscal conservatism. Lindner accused Scholz of pressuring him to abandon the constitutionally mandated debt brake, which Lindner, a staunch advocate of balanced budgets, refused.

The FDP’s other ministers for transport, justice, and education also resigned. Lindner argued that Scholz "lacks the strength to guide Germany forward," and urged a new economic model instead of what he deemed excessive spending.

Economy Minister Robert Habeck of the Greens lamented the breakdown, describing the day as "tragic" at a time when Germany needs unity to address European challenges.