Germany’s Scholz Under Pressure To Hold Quick Confidence Vote

Germany’s opposition conservatives urged Chancellor Olaf Scholz to allow a vote of confidence immediately and hold elections in January, the day after his rocky three-way coalition collapsed and plunged the country into political turmoil.

The coalition fell apart on Wednesday when years of tensions reached their peak in a row over how to plug a multi-billion-euro hole in the budget and how to revive Europe’s largest economy, which is headed for its second year of contraction.

The break-up creates a leadership vacuum at the heart of Europe just as it seeks to form a united response to Tuesday’s election of Republican Donald Trump to a second term as U.S. president on issues ranging from possible new U.S. trade tariffs to Russia’s war in Ukraine and the future of the NATO alliance.

Scholz, of the centre-left Social Democrats (SPD), said he fired his finance minister from the fiscally conservative Free Democrats (FDP) for opposing his plan to suspend the debt brake again in order to raise more funds for Ukraine and the economy.

That led to the FDP withdrawing from the government, leaving Scholz’s SPD and the Greens. The chancellor said he would hold a confidence vote in January, which he would likely lose, triggering new elections by the end of March – six months ahead of elections originally scheduled for September.

Joerg Kukies, a top official in the German chancellery and close SPD ally of Scholz, will be named finance minister, a government spokesperson said on Thursday.

Vote of Confidence
Friedrich Merz, leader of the opposition conservatives who are leading in nationwide polls, called for a vote of confidence immediately, “by the beginning of next week at the latest.”

Elections could take place in the second half of January next year, Merz said. His comments were echoed by other opposition parties.

“We simply cannot afford to have a government without a majority in Germany for several months now, followed by an election campaign for several more months and then possibly several weeks of coalition negotiations,” he told reporters.

“Time is of the essence.”

German industry, reeling from high costs and fierce Asian competition, also urged Berlin on Thursday to hold snap elections as soon as possible.

“Especially in these challenging times, we need a solution-oriented federal government capable of taking action,” said Wolfgang Grosse Entrup, who heads the VCI lobby group for Germany’s key pharma and chemicals sector. “We can not afford a months-long standstill and political deadlock.”

Merz said he would urge Scholz to speed up the confidence vote in his meeting with him scheduled for midday.

Scholz may have to heed those calls given that, due to his coalition’s demise, he will have to rely on cobbled-together parliamentary majorities to pass any serious measures.

The political crisis comes at a critical juncture for Germany, with a flatlining economyageingng infrastructure and an unprepared military. But it could also be a “blessing” given the tensions that had plagued this coalition, the first of its kind at national level, said ING economist Carsten Brzeski.

“Elections and a new government could and should end the current paralysis of an entire country and offer new and clear policy guidance and certainty,” he said.

The rise of both leftist and rightist populism in Germany, as elsewhere in Europe, however, means that even with new elections, the country could struggle to form a coherent coalition with a strong parliamentary majority.

Currently, the opposition conservatives are polling first nationwide on twice the support for the SPD. A poll published by Forsa on Tuesday put the conservatives on 33%, followed by the SPD and the far-right Alternative for Germany (AfD) tied on 16%.

The Greens follow on 10%, with the new populist leftist BSW on 6% – with the FDP and far-left Left party no longer reaching the 5% threshold to enter parliament.

Reuters/Shakirat Sadiq