Olaf Scholz’s beleaguered government collapses
by Daniel Cramphorn
York Global Affairs’ Editor-in-Chief Daniel Cramphorn traces the long decline and fall of Germany’s governing coalition, as well as the prospects for the political parties in the upcoming federal election, and the subsequent coalition negotiations.
The signing of Germany’s coalition agreement in December 2021. From left to right: Annalena Baerbock (Foreign Minister – Green Party), Saskia Esken (Co-Leader of the SPD), Robert Habeck (Vice-Chancellor – Green Party), Olaf Scholz (Chancellor – SPD), Christian Lindner (former Minister of Finance – FDP). Image Credit: Sandro Halank, Wikimedia Commons.
Germany’s beleaguered governing coalition between the Social Democratic Party (SPD), Greens, and Free Democrats (FDP) collapsed on 6 November after FDP leader and Minister of Finance Christian Lindner was sacked by the Chancellor Olaf Scholz.
Brought to power two and a half months after the September 2021 federal election, this was the first government to follow the ‘traffic-light’ model, so named for the colours of the constituent parties. Under this coalition each party was allocated a series of ministries which they held total control over. As part of the agreement the FDP gained control of the Ministry of Finance, setting the scene for the government’s difficulties.
Enjoying only a brief honeymoon, the SPD fell behind the centre-right CDU/CSU Union in the polls as soon as January 2022, a position it has never recovered from, falling into third place behind the far-right Alternativ für Deutschland (AfD) from June 2023. Out of the SPD’s coalition partners it has been the FDP which has suffered most severely in the polls, falling from 11.4 percent in 2021 to below the electoral threshold of five per cent.
At the heart of the government’s instability and rapid fall has been the incompatibility of the SPD and Greens with the FDP. The FDP sits within a tradition of classical liberalism, in many ways surpassing the cultural liberalism of the SPD and Greens, but also crucially (given their control of the Ministry of Finance) positioning themselves as a fiscally conservative party.
For the FDP’s leader Christian Lindner economics is at the heart of his politics. A professional politician, Lindner joined the party at the age of 16, and at 18 started an advertising agency. At the age of just 21 Lindner was elected to the Landtag of North Rhine-Westphalia in the 2000 election, becoming the youngest MP in the land’s history. All of this he achieved before completing his university education, gaining a Masters in Politics with a thesis on financial policy in 2006.
Lindner’s rise to the top of the FDP was completed in 2013: in that year’s federal election the FDP lost all of its seats in the Bundestag, falling below the electoral threshold. Lindner, who was elected leader in the aftermath, led the party back to the Bundestag in 2017, and doubled the party’s vote share. This upward momentum continued in 2021, particularly with younger voters: amongst those aged 18-24 the party came second, ahead of both the Union and SPD.
This extraordinary rise and success is now a distant memory for the FDP, which would have to defy the odds to avoid returning to the wilderness it inhabited in 2013. This has been a crisis for the party and the wider government almost entirely of Lindner’s own making. The most significant conflict in the government emerged over the debt brake, a part of the Basic Law introduced following the Financial Crash in 2009 to restrict the annual budget deficit to 0.35 percent of GDP.
This constitutional limitation has left governments in Germany much less fiscal room than in most other countries, exacerbating the divide between the big-government SPD and Greens who seek reform of the brake, and the debt-brake supporting FDP. In the first years of the coalition government the debt brake was suspended due to a series of emergencies, first during the Covid pandemic in 2021, then the energy crisis in 2022. Since November 2023 the issue of the debt brake has been brought to the fore by a constitutional court ruling which enforced a stricter interpretation of the brake, setting the stage for more budgetary squabbles.
In the run up to the 2025 budget this November, Lindner grew increasingly strident on economic affairs, and outlined the FDP’s economic vision for Germany in an 18-page policy paper. The paper called for cuts to taxes, benefits, and loosening of climate restrictions, all anathema to their coalition partners.
This was the final straw for the SPD and Greens, with Scholz sacking Lindner on 6 November, resulting in the FDP formally withdrawing from the coalition in response. It is now expected that following a confidence vote scheduled for 15 January 2025, new elections will be held for the Bundestag on 23 February.
Recent opinion polling suggests that five parties are likely to pass the electoral threshold: the Union, AfD, SPD, Greens, and BSW, resulting in the FDP and left-wing Die Linke losing all their seats. The centre-right Union is expected to win the largest proportion of seats, followed by the far-right AfD which is expected to win its highest ever share of the vote (in the European Parliament elections this May they won pluralities in all of the New States apart from Berlin).
For the left-wing parties the situation is bleak: the SPD expects significant losses, whilst the Greens expect more minor losses. The socialist Die Linke, cannibalised by the breakaway Bündnis Sahra Wagenknecht (BSW), is expected to fall below the threshold but could hold on to some constituencies. The BSW, a more socially conservative and Russia-sympathetic party, currently polls just above the electoral threshold. It is left to be seen whether either party will survive into the next parliamentary term, or whether the forces of the far-left will be excluded from the Bundestag for the first time since German reunification.
It is almost certain that the Union will lead the next German government with CDU leader Friedrich Merz as Chancellor. What is left uncertain is the nature of the coalition. With the FDP likely to be ejected from the Bundestag, the Union will have already lost its most affable partner. Both the AfD and to a lesser extent the BSW are subject to a ‘cordon sanitaire’ whereby the mainstream political parties permanently exclude them from coalition. This leaves the SPD and the Greens as the only remaining options, with potentially both necessary to form a government (in German political lingo a ‘Kenya coalition’).
A grand coalition or Kenya coalition across the centre-ground of German politics risks repeating the troubles of the past four years, and could see an increasingly inward focus in German politics over financial matters and cultural clashes (the CDU is more socially conservative than the FDP). A Kenya coalition could also leave a parliamentary opposition composed solely of the radical extremes: the AfD and BSW both vocally oppose western support for Ukraine, are strongly critical of the European Union, and are regarded as a threat to German democracy.
It is always possible for the election campaign to change the parties’ circumstances, for better or for worse, but from the outset the next parliamentary term seems to offer only a continuation of the fraught politics of the past four years.
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