Locations Affected: Germany
Germany’s government collapsed on 16 December after Chancellor Olaf Scholz lost a confidence vote in the Bundestag, triggered by the breakdown of his coalition government. This sets the stage for early federal elections, likely on 23 February 2025.
Fracture of the Ruling Coalition
The ruling coalition of the Social Democrats (SPD), Free Democrats (FDP), and Greens fractured over economic disagreements. Scholz dismissed Finance Minister Christian Lindner in November, prompting the FDP to withdraw, leaving the government without a parliamentary majority.
Early Elections and Possible Outcomes
- President Steinmeier is expected to dissolve the Bundestag by 27 December, per constitutional requirements.
- Scholz and his ministers will remain in a caretaker capacity until a new government is formed, which could take months depending on the coalition negotiations.
- Campaigns are likely to focus on economic recovery and immigration policy, with the Christian Democratic Union (CDU) expected to lead in polls. The CDU has traditionally been viewed as a party of fiscal responsibility and economic stability, appealing to voters amid economic uncertainty. Additionally, the CDU benefits from its opposition status, as voters often turn to established alternatives during periods of political and economic challenges.
- Rising support for the AfD reflects voter discontent but remains unlikely to translate into governing power as traditional parties may continue to refuse forming coalitions with the AfD.
Outlook on the Situation
The February elections are expected to result in a CDU-led government, likely through a coalition with the FDP or Greens, or a return to a grand coalition with the SPD. Regardless of the configuration, no single party is expected to secure a majority, making prolonged coalition negotiations highly likely. Political instability and prolonged coalition negotiations could delay economic reforms and heighten uncertainty. Germany’s leadership role within the EU may also weaken temporarily, as coalition-building efforts shift domestic focus inward. Furthermore, geopolitical challenges, such as heightened tensions with Russia and increased competition from China, will likely add complexity to policy decisions in the new administration.
