German Chancellor Olaf Scholz called the vote to trigger a process that allows President Frank-Walter Steinmeier to dissolve Parliament|World Economic Forum|CC BY-NC SA 2.0
German Chancellor Olaf Scholz lost a confidence vote in parliament on Monday, paving the way for early elections in February 2025. Scholz called for the vote, urging lawmakers to reject him to trigger the electoral process. He wanted fresh elections to take place at the earliest.
Scholz has been the chancellor since 2021.
His ruling coalition, which included Scholz’s Social Democrats (SPD), the Green party, and Free Democrats (FDP), collapsed in November after the FDP left in protest of the firing of Finance Minister Christian Lindner over debt management disputes.
The move left Germany without a parliamentary majority during an economic crisis and geopolitical uncertainty, including rising energy costs and inflation.
Scholz called the vote to trigger a process that allows President Frank-Walter Steinmeier to dissolve parliament. He defended his move, saying, “Politics is not a game,” and stressed the need for a stable government to address Germany’s challenges.
Germany’s deepening economic challenges
The German economy faces severe issues, including stagnating industrial production, rising unemployment and a forecasted 0.1% contraction this year. Growth may barely reach 0.4% in 2025, but the Bundesbank warns of further downgrades.
In November, the unemployment rate in the country reached 6.1%—a four-year high.
Energy prices have jumped since Russia invaded Ukraine and are hindering industrial growth.
Auto and manufacturing, which are Germany’s key industries, are struggling with layoffs and declining investments, reflecting reliance on cheap Russian energy and trade with China.
- In October, Volkswagen, one of Germany’s largest employers, announced mass layoffs, citing higher labor costs and declining sales.
- Soon after, Thyssenkrupp AG, the country’s biggest steelmaker, announced it would cut 11,000 jobs over 10 years to reduce costs by 10%. It posted $1.5 billion in losses over last year.
- Scholz supports government bailouts to save jobs, while his rival, Friedrich Merz of the Christian Democratic Union, suggests tax cuts and less regulation.
Polls predict Merz’s party may win but will need to form alliances to govern. Populist parties from the far right and left could gain about 25% of the vote, increasing the risk of political deadlock.
These elections come during global tensions, including Russia’s war in Ukraine and concerns over NATO’s future. Germany also needs to prepare if President-elect Donald Trump imposes blanket tariffs.