Germany headed for early elections after Olaf Scholz loses confidence vote

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Germany is heading for early elections after Chancellor Olaf Scholz lost a vote of confidence, ending his fractious coalition government at a time of strain for the eurozone’s largest economy.

Scholz’s defeat by 207 to 394 votes on Monday paves the way for the dissolution of parliament ahead of the early elections pencilled in for February 23.

In pre-election polling, the chancellor and his centre left Social Democrats are behind both the opposition CDU and the far-right Alternative for Germany (AfD).

Scholz’s widely anticipated defeat sends Germany to the polls amid a darkening economic outlook, the threat of a trade war with the US and political turmoil elsewhere in Europe.

The Bundesbank warned last week that Europe’s largest economy would grow by just 0.1 per cent in 2025.

Immigration and the debate over military support for Ukraine are other divisive issues in an election in which the AfD and other populist parties hope to make big gains.

The SPD and their coalition partners, the Greens, lost their parliamentary majority last month when Scholz sacked his finance minister, the liberal FDP party chief Christian Lindner.

The collapse of the so-called traffic light coalition followed months of quarrelling over the budget and funding the country’s huge investment needs, defence and social spending.

“Politics is not a game,” Scholz said in a speech to MPs before the vote. “The question is if and how we invest in our country.”

The traffic light coalition “has been a courageous project from the very beginning . . . But it is a project that has failed,” said Andrea Römmele, professor of communication in politics at the Hertie School in Berlin.

France has also been contending with political turbulence with the defeat of Michel Barnier’s government in a vote of confidence this month.

Other European governments are also preparing for the return as US president of Donald Trump, who has threatened to impose universal tariffs of up to 20 per cent on imports and called for a brokered deal to end the war in Ukraine.

Scholz’s government was the first three party coalition in Germany’s postwar history.

Taking office in December 2021, the administration vowed to usher in a green industrial revolution for the Eurozone country.

But the plans were derailed when Russia invaded Ukraine three months later, forcing Berlin to reverse decades of reliance on Russian gas and overturn its defence and foreign policy.

Scholz dubbed the challenge the country was facing a “Zeitenwende”, or turning point in history, allocating €100bn to modernise the military and supplying weapons to Ukraine.

He suffered one of his biggest setbacks when the country’s constitutional court invalidated the coalition’s budget in November 2023. The court ruled that t violated a constitutional provision that limits new public borrowing to 0.35 per cent of GDP a year.

The decision led to a €60bn hole in the country’s public finances and to feuding between the fiscally conservative FDP and its coalition partners in the SPD and the Greens.

“We need pretty radical change now,” said Guntram Wolff of Bruegel, a think-tank. “The business model is just going to have to be a different one. It’s not going to be based on . . . cheap Russian gas, the US for security and China for exports. This time is over.”