German coalition shows disunity ahead of crucial 2025 budget talks
The three parties of Germany‘s government coalition are being criticised for showing a high degree of disunity on key topics. Less than a year from the next planned German parliamentary elections in autumn 2025, concern is growing that coalition parties are entering their individual campaign mode instead of leading with one voice.
Ahead of crucial 2025 budget talks, which are considered indicative of the coalition’s continued resilience, two parallel industrial recovery summits held by chancellor Olaf Scholz from the Social Democrats (SPD) and finance minister Christian Lindner from the Free Democrats (FDP) have been viewed as a sign of disarray and competing party concepts, rather than a coherent government approach.
Amid an ongoing period of minimal growth for the German economy, Scholz held a summit with representatives of major companies in the chancellery earlier this week without treasurer Lindner and economy minister Robert Habeck of the Green Party participating. The meeting at the chancellery had been overshadowed by reports of unprecedented factory closures at Germany’s largest carmaker Volkswagen. At the same time, Lindner held a parallel summit focused on small- and medium-sized companies, after Habeck had presented his own industrial policy support concept in the week before.
All parties in the so-called ‘traffic-light-coalition’ (Ampel-Koalition), named after their parties’ respective colours, which assumed office in late 2021 currently poll well below their last election results, while the conservative alliance of Christian Democratic Union (CDU) and Christian Social Union (CSU) enjoys a comfortable lead. The FDP in particular could suffer in case of a snap election if polling trends persist, where it has fallen below the 5-percent-threshold required to enter parliament. At the same time, the populist far-right Alternative for Germany (AfD) and the nationalist-left Sahra Wagenknecht Alliance (BSW) both can look back at recent election victories.
Debt limit continues to be key issue of discontent
Leading coalition party members lashed out at the government partners for failing to cooperate at a time of great difficulty for Germany’s industry, which hopes to secure billions in support funding in the 2025 budget for their contribution to help the country reach greenhouse gas neutrality. The key budget talks are scheduled for 14 November, a date that will hinge on the government’s ability to jointly present a debatable proposal beforehand. If the government fails to agree a budget on time, state support during next year could hang in the balance for many companies, reported Die Welt.
Stephan Weil, SPD state premier for Lower Saxony, said the parallel summit by Lindner was “beneath contempt” and an outrageous act within a coalition, news agency dpa reported. SPD co-leader Saskia Esken said finance minister Lindner’s insistence on leaving Germany’s constitutional ceiling on new debt, the so-called debt brake, untouched in the budget talks would take a toll on the country’s ability to implement urgent investments.
In late 2023, Germany’s highest court ruled that billions of euros earmarked for the country’s Climate and Transformation Fund (CTF) breached the country’s ‘debt brake’ for re-allocating borrowed emergency funds for the pandemic. The ruling threw the government coalition’s financial plans into disarray, forcing it to make cuts to several climate and energy support programmes while scrambling to secure new funding.
A survey in early 2024 found that most Germans want the government to take on new debt to invest in areas that are important for security and prosperity, rather than complying with strict rules on state borrowing. Lindner’s proposal for the new budget is “too small” and “wedded to the debt brake,” Esken told public broadcaster ZDF. At the same time, Esken defended chancellor Scholz’s decision to hold an industry summit without the two key ministers.
Speaking for the Green Party, co-parliamentary faction leader Katharina Dröge told public broadcaster ZDF that the coalition partners had to finally agree on a draft budget decided during the summer. “It would be a good thing if the government did a little more of what it already has agreed on,” Dröge argued, adding that more “vanity summits” are not needed now.
For the FDP, MP Marcus Faber in a separate ZDF broadcast said the coalition’s future depended on its ability to agree on concrete steps in the coming weeks. This particularly concerned the 2025 budget, which had to be agreed within this year still. “If we manage to get something done here, then it will be worth it to keep the coalition together. If we fail to do that, it’s better to clear the path,” Faber said.
One party leaving the coalition would not immediately lead to early elections because of high legal hurdles in Germany. Chancellor Scholz could initiate a vote of confidence and lose, then ask the German president to dissolve parliament and call a new election. The president, however, does not have to comply. If the FDP pulled out of the coalition, Scholz would remain chancellor and could lead a minority government made up of the SPD and the Green Party. It would be the first minority government in Germany and would make finding majorities for legislation extremely difficult – including agreeing on a federal budget for 2025. In the end, dissolving parliament could become the only realistic option to ensure a functioning government with the power to make policy.
In a commentary, public broadcaster DLF agreed that the increase of disunity in recent weeks could point to an early election in March next year. However, DLF correspondent Stephan Detjen said that the budget talks remained a crucial milestone for the government – and that the result of the US presidential election on 5 November could also influence the German coalition’s decision, as it could be pushed to remain intact to inject stability at the global stage.
