German govt splits as Scholz tables January vote of confidence

German Chancellor Olaf Scholz expelled Finance Minister Christian Lindner, the leader of the pro-business Free Democrats (FDP), from government on Wednesday and tabled a January 15 vote of confidence in parliament that could trigger early elections, reported dpa.

The FDP subsequently withdrew all its ministers from government, factually bringing the governing three-way coalition to an end.

The dramatic events follow a bitter row within the centre-left government coalition of Scholz's Social Democrats, the Greens of Economy Minister Robert Habeck and the FDP.

The final insurmountable sticking point was how to plug a huge hole in the 2025 budget and help Germany's ailing economy, with the parties diametrically opposed on the steps needed to stimulate growth.

Breach of confidence

Scholz lashed out at Lindner late on Wednesday, accusing him of clientelism, of drowning out compromises during their three years of joint government with publicly staged disputes and of blocking laws for the wrong reasons.

"Too often he has engaged in small-minded party political tactics. He broke my confidence too many times," the chancellor said.

Conflicting economic visions

Lindner for his part accused Scholz of deliberately breaking up the coalition and leading the country into a phase of uncertainty.

He said Scholz had long "trivialized the economic concerns of citizens" and failed to recognize the need for Germany to embark on a new economic revival. Lindner's own proposals for improving Germany's economic situation were dismissed out of hand, he argued.

"[Scholz's] counter-proposals are weak, unambitious and do nothing to overcome our country's fundamental weakness in growth so that we can maintain our prosperity, our social security and our environmental responsibility," the FDP leader added.

Terrible timing

Habeck meanwhile sided with Scholz, arguing that the collapse of the coalition was as logical as it was unnecessary, since the FDP had not been prepared to consider the compromise solutions on the table.

"I want to say for us that this feels wrong and not right tonight, almost tragic on a day like this, when Germany has to show unity and the ability to act in Europe," Habeck said following a series of coalition crisis talks in the Chancellery in Berlin.

Although possible solutions were on the table, it had not been possible to plug the massive hole in Germany's 2025 draft budget, a major sticking point for the parties, Habeck said. "The FDP was not willing to go down these avenues."

Next steps

On January 15, the Bundestag or lower house of parliament will be asked whether it still has confidence in Scholz. If the answer is no, this paves the way for new elections, which would have to take place in March at the latest.

The next German federal elections are currently scheduled for September next year.

Before the Christmas break in December, Scholz said he plans to put all bills to the vote in parliament that cannot be delayed further, including measures to support industry, stabilize pensions and boost net income.

He also said he would reach out to the leader of the "responsible opposition," Friedrich Merz of the Christian Democrats, to seek rapid joint solutions aimed at strengthening the German economy and the defence portfolio.

"We now need clarity on how we can solidly finance our security and defence in the coming years without jeopardizing cohesion in the country," Scholz said.

In view of the US elections, he said this was "perhaps more urgent than ever."

Gordian knot

One issue that is unlikely to be resolved by the end of the year is the 2025 budget, given the lack of a coalition majority. It is also considered unlikely that the conservatives would help it pass.

Without an approved budget in place by January, special provisions will be required for expenses beyond those required to keep the administration going and meet Germany's legal obligations.

Poor polling

All three parties that formed Scholz's coalition are performing miserably in the polls. The FDP in particular is polling under the crucial 5% threshold required to enter parliament.

The opposition far-right Alternative for Germany party, which is riding high in the polls, welcomed the collapse of Scholz's governing coalition as long overdue, calling it a "liberation" for Germany.

The divisions within the quarrelsome government coalition came to a head over the last few days after a policy paper by Lindner was made public on Friday. In the paper he demanded a fundamental "reorientation" of the government's economic policy.