Why has the German government collapsed?

Germany's coalition government has collapsed, a victim of the country's stagnant economy and infighting among the coalition partners.

Chancellor Olaf Scholz said Thursday he will "lead the country with a minority government," said The Associated Press. His coalition fell apart after he fired Christian Lindner, leader of the Free Democratic Party, as his government's finance minister. Scholz said he does not intend to call new parliamentary elections until Jan. 15 — resisting calls for immediate snap elections. "The citizens will soon have the opportunity to decide anew how to proceed," Scholz added.

Scholz's Social Democrats had previously partnered with Lindner's FDP and the Green Party to govern Germany. The coalition fell apart after Lindner released an 18-page paper calling for a "fundamental economic overhaul" to jumpstart the country's slowing economy and close the government's $2.6 trillion budget gap, reforms that would cut social service programs and pull back from Germany's climate goals, said The New York Times. Those are demands "his coalition partners are highly unlikely to accept." Without such changes, Lindner said, his party would leave the coalition. "The situation as it is now cannot continue," Lindner said.

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What did the commentators say?

Europe's largest economy "has slowly but steadily sunk into crisis," said The Financial Times. Three big drivers of the economy — the automotive, chemical and engineering sectors — "are all in a slump at the same time," making it likely that the annual gross domestic product will shrink for the second year in a row. That's the "most pronounced downturn" in Germany's postwar history, said Robin Winkler, Deutsche Bank's Germany chief economist. This has left Scholz's coalition "ever more paralyzed" about how to proceed, said the Times: "Light on the horizon is hard to detect."

"Volkswagen's woes mirror Germany's," Hanna Ziady said at CNN. The company recently said it could close factories and cut thousands of jobs. "Things cannot continue as they are now," chief financial officer Arno Antlitz said to reporters. Both Volkswagen and its home country are challenged by "high labor costs, weak productivity and competition from China," Ziady said. Those factors, alongside high taxes and an aging population, will require dramatic action. But arguments among the "fractious" three-way coalition has "left the government lacking a clear vision for the country."

What next?

A coalition collapse could be "disastrous for all three coalition parties," said Reuters. SDP and the Greens have lost support since the 2021 election, and the FDP "could be ejected from parliament altogether." But the dispute involves fundamental differences: FDP wants budget cuts, while the other two parties "agree that targeted government spending is needed to stimulate the economy," Reuters said.

"Germany needs to have an honest debate with itself," Jörn Fleck, the senior director of the Atlantic Council's Europe Center, said at the think tank's blog. But it is tough to know what happens next. A "slight majority" of Germans favored early elections even before the governing coalition fell apart. There is an opportunity, Fleck said. "A fresh start might be the next best chance for Europe's former powerhouse to find its footing."