Germany Elections Ahoy

++ German snap elections are coming in March 2025 at the latest as the coalition decides its every man for himself ++

• German Chancellor Scholz of the SPD has just fired his Finance Minister Christian Lindner of the FDP.
• In effect, Lindner pushed Scholz into it.
  • The FDP has been plumbing the depths in opinion polls, struggling below even the 5% threshold required for representation. It has become an existential issue
  • Lindner simply wanted to quit on a point of principle to resurrect any hope of the FDP gaining ground in an early election campaign.
• The government coalition is wildly unpopular – the three parties together still polling lower than the CDU/CSU who are the frontrunners on 32%.

• By firing Lindner, the SPD and Greens can try to restore their position with their own voter base and try to stem the losses in an election that would have had to be held by September 2025 anyway.
• This has all come to a head with budget negotiations required to be finalised by 15th November.
  • Lindner and Habeck, the Economy Minister from the Green Party, have been at loggerheads over priorities, with both putting forward their own policy papers in the last fortnight.
  • Habeck conceded to Lindner over the use of 10bn EUR that had been earmarked for subsidies to Intel who recently delayed their semiconductor factory – Habeck wanted to use it for the Climate and Transformation Fund, Lindner wanted it back into the normal budget to offset spending elsewhere
  • This wasn’t enough of a concession for Lindner
• Scholz also has to appeal to his socialist voter base and he wanted to suspend the Debt Brake, which he knew would push at the very core of the FDP’s existence
  • Lindner wouldn’t budge and so Scholz fired him
• This leaves both of them looking like they died on a hill for their core principles
  • Lindner will have been buoyed by the success of the Republicans in the US, thinking it shows momentum towards his brand of pro-business and anti-establishment economics.
• Scholz has announced 15 January 2025 for the vote of confidence which would pave the way for early elections by the end of March 2025 if, as we expect, he loses.
  • There are city elections slated for Hamburg on 2 March and Scholz sees the city as his stronghold, having been Mayor there
  • This could mean federal elections as soon as 9th March
• We flagged up in The Year That Will Be that there was a risk of snap German elections as “it will become apparent to Lindner and his party that remaining in the coalition is an existential question. Departing early might limit their electoral losses. This would provide the opportunity for the AfD to demonstrate its support at a federal level, changing the shape of Europe once again as the continent moves towards the right“.