Finance minister’s leaked paper drives German coalition to the brink as budget deadline looms
Amid simmering tensions over Germany’s 2025 budget, the country’s coalition government is teetering further toward the brink of collapse after a leaked position paper by finance minister Christian Lindner from the pro-business Free Democrats (FDP) showed to be starkly at odds with coalition partners on key policy questions.
The paper titled “Economic transition for Germany – economic concepts for growth and inter-generational fairness,” seen by Clean Energy Wire, which details policy approaches of Lindner’s FDP, especially regarding climate action and economic transformation, had not been the subject of consultation with chancellor Olaf Scholz’s Social Democrats (SPD) nor with economy minister Robert Habeck’s Green Party.
The paper appears to position the FDP apart from its coalition, in preparation for a federal election. Amongst other things, the party calls for relaxing a wide range of emissions reduction laws, reducing social security payments, lowering taxes, and doing away with Germany’s “unique path” regarding climate policy, demands that are hardly reconcilable with core positions of the SPD and the Greens.
The 18-page document surfaced only two weeks ahead of a parliamentary meeting on 14 November, when the coalition is set to make crucial decisions for the upcoming 2025 budget. The budget meeting is considered indicative of whether the coalition still can overcome internal differences and decide on key policy matters together, or whether Scholz’s government is facing a full collapse that could eventually lead to snap elections early next year, well before the official end of the coalition’s term in autumn 2025. All three governing parties, including the SPD and the Greens, have sought to strengthen their individual profiles in recent weeks.
The parties of the so-called ‘traffic-light-coalition’ (Ampel-Koalition), named after their respective colours, are suffering from very low popularity ratings, an ongoing period of minimal economic growth and industrial policy challenges, while the conservative opposition alliance of the Christian Democrat Union (CDU) and the Christian Social Union (CSU) enjoys a clear lead in polls. Lindner’s FDP fears in particular that its involvement in the unpopular coalition could ultimately cause it to fall below the 5-percent threshold needed to enter parliament in the next election.
Finance minister calls for abolishing key EU climate rules
In the paper, Lindner calls for “a fundamental revision of key political decisions” to protect Germany’s economy. Key measures for emissions reduction, such as targets for climate friendly heating, should be delayed and more ambitious national climate targets be abandoned and replaced by joint European targets and regulation. Germany is aiming for greenhouse-gas neutrality by 2045, a decision by the previous government that was triggered by a landmark court ruling on inter-generational fairness. The EU is aiming for climate neutrality by 2050. At the same time, however, Lindner called for key EU rules to be abolished: “Germany should push for a repeal of the regulations on energy efficiency, building energy efficiency and vehicle fleet limits at European level,” the paper says.
The finance minister also called for the abolition of EU-wide emissions reporting regulations for companies, and wants to form member state alliances which “aim to abolish the EU taxonomy, the EU Corporate Sustainability Reporting Directive, the EU Corporate Sustainability Due Diligence Directive and the Circular Economy Action Plan.” The minister also said he wants to cut state support programmes, for example for renewables, the “climate contracts” programme for industry transformation, a key project by economy minister Habeck, or the funding for energy efficient building renovation.
The leaked paper sent shockwaves through the government parties and Scholz’s cabinet at a time when his coalition is required to decide a joint draft budget for presentation at the parliament’s budget committee next week. According to news magazine Der Spiegel, Scholz scheduled a series of personal meetings with Lindner and Habeck this week in a bid to restore order and unity in the coalition, and decide how the remaining gaps in the budget can be closed.
While global attention is focused on the US elections on 5 November and its fallout, the coalition leaders’ progress on the draft could therefore decide whether an early election in Europe’s largest economy is looming.
Deciding on a budget has been complicated by the constitutional court’s debt limit ruling in late 2023, which declared the earmarking of 60 billion euros for the country’s Climate and Transformation Fund (CFT) unlawful. This meant that 2024’s budget had to be redrafted and adopted retroactively, a situation the government said it wants to avoid this time around by agreeing a budget at an earlier point in November.
Opposition welcomes Lindner's paper
The budget is due at a time of great difficulty for Germany’s industry, which hopes to secure billions in support in 2025’s budget for their contribution to help the country reach greenhouse gas neutrality. Separate industrial policy summits held by chancellor Scholz and finance minister Lindner were the clearest signs of party divergence over key coalition policy areas.
The FDP paper was promptly rejected by leading members of the other two coalition partners. SPD co-leader Saskia Esken said the points made by Lindner “are squarely impossible to implement in this coalition,” the Süddeutsche Zeitung reported. Esken added that “nobody wants to make a prediction about when the next elections will take place. But it cannot be denied that the coalition’s house is on fire right now.”
The Green Party’s deputy parliamentary group leader Andreas Audretsch told news site t-online that Lindner’s attention should be focussed on closing budgetary gaps, for which the position paper made no viable contribution. “It’s important for our country that the finance minister lives up to this responsibility,” Audretsch argued.
Lindner, meanwhile, said the coming meetings would be used to overcome coalition differences. “I can promise citizens that we will resolve this situation quickly,” he told public broadcaster ZDF.
Friedrich Merz, leader of the CDU opposition party, welcomed Lindner’s paper, arguing that there was a sizeable overlap with his own party’s positions. “Details can still be discussed, but the proposals are pointing in the right direction,” Merz said in an e-mail statement. CSU head Markus Söder, Bavaria’s state premier, said that he thought the current dispute meant the end of Scholz’s government coalition.
In an interview with Tagesspiegel Background, CDU deputy leader Jens Spahn teased a set of policy approaches that the conservative alliance could make part of its next government programme, adding that Germany should reconsider its decision to phase out nuclear energy. The next general election should become “a referendum on whether we want to restart some of the last six reactors that went offline.” If there was a majority for this and the CDU led the next government, “this certainly would be something we will start to work on” and would “assess where and at what scale it is possible.” In contrast to Spahn’s remarks, CDU leader Merz at an energy industry conference earlier this year said that he regarded the matter settled for Germany.
