Germany’s government coalition has collapsed in a dramatic fashion as Chancellor Olaf Scholz fired Finance Minister Christian Lindner of the pro-business Free Democrats. Despite calls from opposition leaders for early elections, Scholz announced on Thursday that he would lead the country with a minority government.
Chancellor Scholz stated that the minority government would consist of his Social Democrats and the Greens until early next year. This announcement comes in the face of demands from Friedrich Merz, leader of the biggest opposition bloc in parliament from the center-right Christian Democrats, who called for an immediate no-confidence vote and new elections.
Reiterating his stance on Thursday, Scholz emphasized that he does not plan to call a vote of confidence before January 15. “The citizens will soon have the opportunity to decide anew how to proceed,” Scholz explained, as reported by the German news agency dpa. “That is their right. I will therefore put the vote of confidence to the Bundestag at the beginning of next year.”
A morning meeting between Merz and Scholz at the chancellery regarding a date for the next election ended abruptly, with Merz leaving without comment after less than an hour.
Later on Thursday, President Frank-Walter Steinmeier officially dismissed Finance Minister Lindner and two other Free Democrats officials who had resigned — Research Minister Bettina Stark-Watzinger and Justice Minister Marco Buschmann. Meanwhile, Transport Minister Volker Wissing, also from the Free Democrats, chose to remain in office and leave his party after discussions with Scholz. Scholz asked him to assume the justice ministry in addition to his current portfolio.
Steinmeier also appointed Jörg Kukies, an economic adviser to Scholz, as the new finance minister. Agriculture Minister Cem Özdemir from the Greens agreed to take on the research ministry.
Scholz had revealed late Wednesday his intent to seek a vote of confidence on January 15, which might lead to an early election, possibly as soon as March. The vote had originally been scheduled for next September.
Following Lindner’s dismissal, Scholz accused the former finance minister of breaching trust and pushing for a fundamentally different economic policy. This included substantial tax cuts for top earners while reducing pensions for retirees, which Scholz argued was “not decent.”
The chancellor is hopeful that his minority government, composed of the Social Democrats and the Greens, will garner support from Merz’s Christian Democrats in the coming weeks to pass crucial legislation and address the billion-euro gap in the 2025 budget.
However, Merz strongly opposed Scholz’s plan to delay the vote of confidence until January. “The coalition no longer has a majority in the German Bundestag, and we therefore call on the chancellor to call a vote of confidence immediately, or at the latest by the beginning of next week,” Merz asserted. “We simply cannot afford to have a government without a majority in Germany for several months now, and then campaign for several more months, and then possibly conduct coalition negotiations for several weeks.”
Given Scholz’s lack of a parliamentary majority, losing the vote of confidence seems likely. Should this occur, Germany’s president could dissolve parliament within 21 days, potentially leading to an early election as soon as January. “During these 21 days, we will have enough time to find out whether there are any issues that we may have to decide on together,” Merz said, indicating his party’s readiness to cooperate with the minority government. “We are, of course, prepared to hold talks … we are also prepared to take responsibility for our country.”
Achim Wambach from the Leibniz Center for European Economic Research expressed skepticism about the potential benefits of a prolonged period with a minority government for Germany’s economy. “Germany’s problems are too big to tolerate political gridlock,” Wambach remarked. “The government set out to reconcile the transformation towards climate neutrality with economic growth and social security. It has not lived up to this claim. The economy is stagnating, and investments are failing to materialize.”
Wambach noted that geopolitical tensions, including wars in Europe and the Middle East, as well as economically harmful interventions through tariffs and national subsidy policies, have compounded these issues. “The election of Donald Trump has exacerbated these problems. Europe must do more for its security and will have to reckon with increased tariffs,” he added.
The coalition’s collapse follows weeks of internal disputes over strategies to revitalize the country’s struggling economy. Lindner’s Free Democrats had staunchly opposed tax hikes or altering Germany’s stringent debt limits. On the other hand, the Social Democrats and the Greens advocated for significant state investment and opposed the Free Democrats’ welfare cut proposals.
