(Bloomberg) — The German chancellor’s Social Democrats and opposition lawmakers have reached a deal to hold early elections in February, according to government officials familiar with the negotiations.
The federal vote, which was originally scheduled for Sept. 28, is now expected to be held on Feb. 23, said the officials, who asked not to be identified discussing confidential planning. Scholz will face a vote of confidence on December 16, which will pave the way for the election.
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Europe’s biggest economy was plunged into political uncertainty last week after Scholz fired Finance Minister Christian Lindner of the Liberal Democratic Party, breaking up the ruling coalition in a dispute over loans to boost military support for Ukraine.
The government crisis comes at a difficult time for Germany, as the country’s economic outlook has darkened amid weakness in its manufacturing sector and a struggling auto industry. Berlin also has to deal with a new American president who has threatened European companies with tariffs and has had an antagonistic relationship with previous chancellors.
While polls suggest that Friedrich Merz, leader of the conservative opposition CDU/CSU alliance, is the favorite for the election, Scholz expressed confidence on Sunday that he can win. He said he defied poor poll numbers before winning the chancellorship in 2021.
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“It is really time for the chancellor, after these three years of the so-called coalition of progress, to now open the way for new elections,” Merz said at a conference on Tuesday. “Germany is a sleeping middle power and must become an active middle power.”
“I will ensure new leadership in Europe for Europe,” he said.
Scholz will need to trigger the national vote by first submitting to a vote of confidence in the lower house of parliament on December 16. Once the chancellor loses this, he can ask the president to dissolve parliament. The election would then need to be held within 60 days.
Merz’s center-right alliance is leading in opinion polls with more than 30%, putting it in prime position to regain the chancellorship after losing to Scholz’s SPD party three years ago.
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Support for the SPD stands at around 16% in third place, behind the far-right Alternative for Germany in second with around 18%. The Greens are at around 11% in fourth, while a new far-left party — the Alliance Sahra Wagenknecht — is in fifth with around 8%.
The FDP has just 3% in the polls, down from 11.5% in the 2021 election, which puts it at risk of not reaching the 5% threshold to enter parliament.
German industry lobbies echoed calls for a quick election, arguing that the country urgently needs political stability given the current geopolitical turmoil.
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Germany’s economy has failed to recover sustainably from the pandemic and the war in Ukraine, with some economists predicting that output in 2024 will decline for the second year in a row.
The main weakness is its important manufacturing sector, which is hampered by weak external demand, high borrowing costs and a series of internal structural problems.
Investor confidence in Germany unexpectedly worsened in November, with an expectations index from the ZEW institute falling to 7.4 from 13.1 the previous month. Economists had predicted a rise to 13.2.
