Germany's coalition faces a critical budget showdown this week
"Critical talks" are scheduled for Tuesday and Wednesday within the German coalition, which is already on shaky ground, reports Politico. "Germany’s already teetering coalition is facing a crunch week that could spell the end of Chancellor Olaf Scholz’s government," the article states. The government in Berlin is currently debating the budget.
Chancellor Olaf Scholz will meet this week with Economy Minister Robert Habeck of the Greens and Finance Minister Christian Lindner of the Free Democratic Party (FDP). The politicians aim to resolve the crisis related to the conflict over next year's budget.
On November 1, a draft program from the FDP was leaked. In the document, the Finance Minister presented a tax-cut plan and limited an already adopted climate policy. Politico notes that these proposals align with the FDP's approach to a balanced budget but contradict the policies of the SPD and the Greens.
The document is 18 pages long and has been compared to a 1982 draft by then-Economy Minister Otto Graf Lambsdorff, who was also from the FDP. Politico recalls that Lambsdorff's ideas led to the collapse of the SPD-led government, followed by the Christian Democrats taking power and Helmut Kohl's 16-year rule.
Lindner's document was intended to "shock" the chancellor's office. As a result, Scholz decided to organize meetings with coalition partners, which could only end in two ways: the coalition would reach an agreement, or the partners would part ways.
"The latter would either mean the collapse of the governing coalition and thus snap elections, likely in spring; or an FDP exit from the governing coalition, with the SPD and the Greens continuing to rule in a minority government," Politico speculates.
Budget Dispute
The government conflict is associated with a budget gap for 2025 amounting to 2.4 billion euros (2.6 billion dollars) or potentially more amidst an economic slowdown. The issue is finding additional funds for revitalization.
Layoffs in Volkswagen factories symbolize Germany's problems, with several tens of thousands of people expected to lose their jobs. Volkswagen is selling fewer vehicles with combustion engines, especially in China. The transition to electric vehicles is advancing much faster in China than in Europe, and Chinese consumers prefer to buy from domestic manufacturers, partly due to cost and better digitalization.
The results of the U.S. elections are expected to be a key aspect of coalition talks. Donald Trump’s victory could "inspire the coalition to further action." The co-chairman of the Greens, Omid Nouripour, noted the importance of the U.S. elections.
"This will have serious consequences for our economy, for our security, for the military situation throughout Europe," Nouripour explained.
