Germany’s ruling coalition collapses. What does that mean and what will happen next?

Germany appears headed for surprise elections and complete political change after the collapse of its highly unpopular ruling coalition this week.

Until Wednesday, Germany, which operates under a parliamentary system in which multiple parties vie for power, was ruled by a fragile coalition of three parties with very different objectives. That arrangement changed after Prime Minister Olaf Scholz, a member of the centre-left Social Democratic Party that leads the coalition, sacked the finance minister, a member of the fiscally conservative Free Democratic Party, over a budget dispute.

In response, the Free Democratic Party withdrew from the coalition, leaving the Social Democratic Party and its other coalition partner, the climate-focused Green Party, with no majority in Germany’s Bundestag. Both parties will continue to govern the country for the time being, but passing legislation will be difficult.

As a result, Germany faces a political impasse. Scholz said he would hold a vote of confidence in the government in January. He and the Greens are expected to lose, which would likely lead to early elections and the promotion of different parties and politicians to leadership positions, marking a major change in the direction of German politics. Dew.

Why were things so chaotic in Germany?

The three-party coalition had problems almost from the beginning.

Scholz is by no means particularly popular, and his party is steadily losing ground in both the European Parliament and state elections to the right-wing Alternative for Germany (AfD) and other minority parties.

Another problem facing the coalition government was that Germany’s economic growth has been weak for years and is struggling to recover from the coronavirus pandemic. The main reason for this is that Germany’s auto industry is threatened by imports of electrical goods from China and a decline in demand. Germany’s energy costs have soared following sanctions on cheap Russian fuel that the country relied on before Russia invaded Ukraine.

Although no party won a majority in 2021, the coalition members, each with vastly different approaches to spending, will work together “on the basis that we have a fairly deep budget from coronavirus surplus funds.” We agreed on that. Liana Fix, a European affairs fellow at the Council on Foreign Relations, spoke to Vox about the country’s response to the pandemic.

Fix said the plan was in line with each party’s priorities: “Social Democrats would deliver social benefits to their constituencies, Liberals would cut taxes for business owners, and the Greens would deliver climate change projects.”

But Germany’s Constitutional Court ruled earlier this year that the coronavirus emergency fund could not be used for other priorities, leaving a multibillion-euro hole in Germany’s budget.

Adding to the problem is that Germany has a constitutional debt level that cannot be exceeded. Mr. Scholz wanted to raise its debt levels in order to surge aid to Ukraine during its war with Russia. The sacked finance minister, Christian Lindner, said doing so would be tantamount to “violating my oath of office.”

Opposition parties are calling for swift action to form a new government, especially given that US President-elect Donald Trump will be inaugurated in January. He threatened to impose tariffs that could further damage Germany’s economy. The election schedule proposed by Scholz would not allow a new government to be formed before June. If they form a party, he and the Social Democratic Party are likely to be voted out of office.