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German Chancellor Olaf Scholz will meet with his two coalition partners to find common ground amid rumours over an impending coalition collapse after leaders put forward contradictory plans to fix the nation’s ailing economy.
A leaked document by Finance Minister Christian Lindner (FDP/Renew) raised eyebrows in Berlin on Friday (1 November), with its push for tax cuts and fiscal discipline widely interpreted as a challenge to the investment plan Green Economy Minister Robert Habeck put forward just days earlier.
The stand-off is the latest escalation in a row over economic and industrial policy between the coalition partners – the FDP, the Greens and Scholz’s Social Democrats (SPD/S&D) – that has fuelled speculation of the coalition’s potential collapse, less than a year before elections are due.
But a government source told Reuters on Sunday (3 November) that Scholz would hold several meetings with Lindner and Habeck in the coming days, saying that “now that everyone has submitted their paper, we have to see how they fit with each other.”
Other media reported that there would be two to three meetings before the coalition leaders unite for their regular coalition committee meeting on Wednesday, which some speculated could bring about the coalition’s end.
A worsening business outlook in Europe’s largest economy has widened divisions in Scholz’s infighting-prone coalition over policy measures to drive growth and reinforce Germany’s position as a global industrial hub.
While Habeck wants to create a multibillion-euro fund to stimulate investment and circumvent Germany’s strict fiscal spending rules, Lindner advocates tax cuts to spur the economy and immediately halt all new regulations. Meanwhile, Scholz held an uncoordinated meeting with industry leaders last week to develop a ‘pact for the industry’.
FDP increases pressure
SPD leader Lars Klingbeil signalled openness to discussing Lindner’s proposals in a local newspaper interview but said that some were untenable for his party. However, Torsten Herbst, an FDP leadership board member, told Bild that there would be “no basis for a federal budget and thus for the government if there is no fundamental change to the economic policy.”
The FDP had issued thinly veiled threats that it could leave the coalition this autumn if the government failed to agree to its preferred policies after a series of disastrous regional election results.
The main opposition, the centre-right CDU/CSU list, reacted to the developments with calls for snap elections. However, those would come at an untimely moment for the coalition, given its anaemic polling. In a poll published on Saturday, the parties stand at a cumulative 30%, less than the CDU/CSU’s 32%.