German leader will undergo vote of confidence in Parliament on December 16 due to coalition breakdown
Germany plunged into political instability after Chancellor Olaf Scholz (Social Democratic Party, center-left) dismissed Finance Minister and political ally Christian Lindner (Liberal Democratic Party, center-right) on November 6.
The dismissal took place after a disagreement over the government’s budget plan for 2025 and the way it would cover a billion-dollar deficit.
The chancellor’s decision broke the so-called “Traffic Coalition”, made up of the Social Democratic Party (red), the Liberal Democratic Party (yellow) and the Green Party (center-left). Together, these acronyms maintained the majority of seats in Parliament (Bundestag) and managed to govern the country.
With the breakdown of the political agreement between the acronyms, Scholz will face the vote of confidence from deputies on December 16. The tendency is for him to be ousted from office due to losing the majority support of the Legislature.
CONTENTIOUS RELATIONSHIP
The relationship between Scholz and Lindner was troubled during the Social Democrat government, which began in December 2021. Disagreements over the economic plan that should be followed by Germany arose at various times during the coalition.
Lindner is a supporter of fiscal austerity policies and less government intervention in the economy. On the other hand, Scholz supports subsidies for certain sectors, such as green energy production, and state interventions in the market when deemed necessary.
These ideological differences were added to other problems facing the German government. The population’s fear of the State’s difficulty in paying pensions to citizens in the future, the increase in the cost of living resulting from the rise in energy prices and the industry negatively affected by the trade balance deficit with China put pressure on the Scholz government .
INDUSTRY & CHINA
Germany’s trade relationship with China is a complication facing the German industrial sector. Before, countries made complementary exchanges. Berlin sold cars, machines and chemicals to the Chinese. And Beijing sold consumer goods to the Germans.
However, the Chinese became self-sufficient in items that were previously imported from the European country, while the Germans continued to increase their imports from the Asian country. This has resulted in an imbalance for German industries, which are now planning spending cuts – which ultimately means laying off employees.
Volkswagen, a traditional German vehicle production company, announced the cost reduction plan in October. It intends to close 3 factories in the country and reduce expenses in those that remain in operation. A halt to future increases in workers’ wages is also expected in the coming years.
Volkswagen’s move is not exclusive. Other companies affected by the entry of Chinese products into German commerce are pursuing the same strategy. These economic uncertainties for companies and citizens undermined Scholz’s popularity, which saw his administration’s assessment crumble after August 2023.
INDICATORS
Future expectations for Germany’s economy are not as positive as in previous decades, when the country grew economically and was seen as an example on the continent. The European Commission projects that Germany will have an economic contraction of 0.1% this year and a timid growth of 0.7% and 1.3% in 2025 and 2026, respectively.
Public debt, a concern for Lindner and his allies, is expected to remain as it is and inflation is expected to fall in the coming years.
GERMANY’S POLITICAL FUTURE
If Scholz is failed by parliamentarians on December 16, Germany will undergo an early nationwide legislative election on February 23. All seats in Parliament will be decided. The coalition or party that obtains a majority will have the prerogative to nominate the new chancellor.
At the moment, the acronyms are negotiating the allocation of positions for the formation of new coalitions. There are no officially formed groups yet.
The CDU (Christian Democratic Union, center-right), owned by former Chancellor Angela Merkel and led by deputy Friedrich Merz, is the party that has the best performance in polls of voting intentions. They were Scholz’s opposition throughout the Social Democrat government.
Merz’s party will be central to the formation of coalitions. The leader does not rule out allying himself with the Liberal Democratic Party and returning Christian Lindner to the position of Minister of Finance. Merz sees a possible agreement with the Liberals as conducive to a coalition “stable”different from the “Traffic Coalition”.
However, for this alliance to be formed, the former minister’s party must perform according to the average of intention polls. This is because a party only remains active in the German Parliament if it obtains at least 5% of the seats. If they don’t get these seats, they won’t have representation in the Legislature.
AFD STRENGTH
The AfD (Alternative for Germany, right) is another party that will be closely watched in the likely February elections. The party is accused of political extremism by opponents and association with Nazi ideas.
Reputation keeps other parties away from forming possible alliances, making the party a lone party in Parliament – which is likely to happen again in the next legislature. Despite this, the party should maintain its improved performance in the elections as in previous years and elect even more deputies.
This report was produced by journalism intern José Luís Costa under the supervision of editors Amanda Garcia and Ighor Nóbrega.
