On November 5, a historic day in American politics, the German Federal Government also made it into the news. The German government coalition of Social Democrats (SPD), Greens and Liberals (FDP) has collapsed. There will be held new elections until the end of March 2025 at the latest.
Background
After weeks of controversies and disputes among the governing coalition partners, particularly over the economic and financial policy direction and the preparation of a federal budget for 2025, Chancellor Olaf Scholz (SPD) dismissed Finance Minister Christian Lindner (Liberals/FDP) on the evening of November 6, 2024.
In recent weeks, Lindner had repeatedly questioned joint decisions within the government coalition, particularly with regard to the federal budget. The submission of a paper by Lindner on a drastic reorientation of economic policy in the current difficult economic situation in Germany was the final step towards a break-up of the coalition. In his strategy paper, Lindner proposed, among other things, a complete change of course in climate policy. These policy proposals were perceived as the final provocation by Federal Chancellor Scholz and Economics Minister Robert Habeck (Greens).
On the evening of November 6, 2024, the so-called Coalition Committee met in the Federal Chancellery, comprising the leaders of the governing parties and of the governing parliamentary groups in the Bundestag, as well as leading federal ministers. When no solution was found after hours of negotiations on the 2025 federal budget and on major economic policy questions, Finance Minister Lindner suggested to Chancellor Scholz to call for new elections at the beginning of 2025. As a consequence, Scholz dismissed Finance Minister Lindner. The dismissal means that the government coalition, which had been considered a marriage of convenience from the outset, has now come to an end.
In a press conference, Scholz made an unusually harsh attack on Lindner in his speech. He said that Lindner had “once again irresponsibly abused the Chancellor’s trust”. With this harsh attack, Scholz attempted to seize the initiative and gain sovereignty of interpretation over the break-up of the government coalition. According to insiders, Scholz also pre-empted Finance Minister Lindner, who had allegedly planned for November 7 to leave the Federal Government on his own initiative.
Successor to Finance Minister Lindner is Jörg Kukies, a close confidant of Chancellor Scholz. Before, Kukies was State Minister at the Federal Chancellery and State Secretary at the Ministry of Finance. Minister of Digital and Transport, Volker Wissing, is the only Liberal minister to remain in the Federal Government. With the break-up of the government coalition, Wissing left the Liberal Party (FDP) and will now stay Minister of Digital and Transport as minister without party affiliation. He will also take over the responsibility for the Ministry of Justice from his former Liberal party colleague Marco Buschmann. Minister of Agriculture and Food, Cem Özdemir (Greens), will also take over the responsibility for the Ministry of Education and Research from the Liberal Bettina Stark-Watzinger.
What is going to happen now?
- The Federal Government will remain in office for the time being, but with two coalition partners only. The Federal Parliament (Bundestag) will also continue working.
- The remaining two-party coalition of Social Democrats and Greens hopes that the Bundestag will pass the important bills which have already been submitted by the Federal Government to the Bundestag. The most important draft law in the Bundestag is the federal budget law for FY2025. However, the Federal Government, which does not have an own majority of votes in the Bundestag anymore, is now dependent on the support of the opposition and/or its former coalition partner FDP in the Bundestag.
- In theory, Chancellor Scholz had three options for continuing to lead the Federal Government:
- Forming a minority government of Social Democrats (SPD) and Greens (i.e. without Liberals/FDP): this was unlikely to happen because such a minority government would have had no chance to get draft laws approved by the Bundestag.
- Forming a new government: Chancellor Scholz could have approached the leading opposition party CDU/CSU and convinced them to join his government coalition. This was also unlikely to happen because CDU/CSU would be much better off in new elections.
- Calling for new elections.
- Chancellor Olaf Scholz has finally opted for the third option. Scholz will call a vote of confidence in the Bundestag on January 15, 2025, thus allowing Parliament to decide on an early election (the regular federal election would have taken place on September 28, 2025).
- In all likelihood, the majority of Members of Parliament will not express their confidence in Chancellor Scholz. If the Bundestag withdraws its confidence in the Chancellor, the President of the Federal Republic of Germany will dissolve the Bundestag within 21 days. According to the German Basic Law, new elections must be held within a maximum of 60 days after the dissolution of the Bundestag. This is intended to bring about a rapid clarification of the political situation. Taking these constitutional deadlines into account, new elections will be held by the end of March 2025 at the latest.
- There is already mounting pressure on Chancellor Scholz to accelerate the process and call a vote of confidence in the Bundestag as early as possible. From a legal point of view, this would be possible at any date. However, many Members of Parliament, not only from the governing parties, now face a huge challenge: they have to organize an election campaign within ten weeks without having an election program in place, without having a politically aligned agenda, without knowing about their ranking on the party lists for the election, and without having the financial and personnel resources in place. This might be the biggest challenge the parliamentarians of all parties have to deal with in the coming weeks.
- One more thought on timing: if the new elections take place in March 2025, it will probably take several weeks to agree on a coalition agreement. Only once this is in place could the Federal Government begin to work politically. In a worst-case scenario, a new Federal Government will not be ready to work before the third quarter of 2025.
Some more interesting thoughts for those familiar with the details of German politics:
- For the CDU/CSU candidate for chancellor, Friedrich Merz, new elections come at an advantageous time. The conservatives are clearly ahead in all polls and will most likely lead the next Federal Government coalition. The short election campaign also means that Friedrich Merz’s internal rival, Bavarian Minister President Markus Söder (CSU), will not pose a threat to Merz’s candidacy.
- The new elections have also settled the discussion as to who will be the SPD’s candidate for chancellor. Minister of Defense Boris Pistorius was repeatedly seen as a good alternative to Chancellor Olaf Scholz, but now Scholz will most likely be again the SPD’s candidate in an election campaign.
- The new elections come at the worst possible time for the three coalition partners of the former Federal Government. The Liberals/FDP have been below the 5% threshold in all polls for weeks and is in danger of not re-entering the Bundestag in a new election. The Greens and the SPD are also in a much worse position than they were four years ago. It remains to be seen whether and how the extremist parties, the far-right AfD and the far-left BSW, will be able to take advantage of the situation.
- From today’s perspective, the next Federal Government will be led by the conservative CDU/CSU. However, the CDU/CSU will need at least one coalition partner. In all likelihood, this will be the Social Democratic SPD. Depending on the final outcome of the election, a third coalition partner might be needed. Due to the fact that neither Social Democrats nor Greens will want to go into a government coalition with the Liberals again, CDU/CSU might have to choose the Greens as a potential third coalition partner.
By Heiko Weiss
Heiko Weiss is a Partner in DGA Group’s Berlin office, specializing in public affairs and geopolitical advisory. His policy expertise spans financial services, defense and security, telecommunications, as well as energy, environment and sustainability.