German Opposition Leader Wants Confidence Vote by Next Week
(Bloomberg) -- German opposition leader Friedrich Merz said Chancellor Olaf Scholz should submit to a vote of confidence by early next week at the latest, paving the way for fresh elections as soon as mid-January.
Most Read from Bloomberg
Key Ballot Initiatives and Local Races Highlight Views on Abortion, Immigration
From Housing to Immigration, Key Ballot Initiatives and Local Races to Follow
Scholz, a Social Democrat, brought an end to his three-party alliance with the Greens and fiscally conservative Free Democrats late Wednesday when he sacked FDP Finance Minister Christian Lindner.
The chancellor is trying to stave off a fresh election until March to give his beleaguered party a chance to recover. Merz and his conservative CDU/CSU alliance, which has a big lead in opinion polls, want the vote to happen sooner.
“It is important that we now very quickly put responsibility for the composition of the German Bundestag back into the hands of the voters,” Merz told reporters in Berlin after a meeting of his parliamentary caucus.
Lindner backed Merz’s call for the election to happen as soon as possible when he spoke to reporters later on Thursday. The vote was due to take place in September 2025.
“I’m going to ask the chancellor in a conversation this afternoon to clear the way for this,” Merz said.
German bunds slid in early trading on Thursday, with the yield on 10-year notes rising about 6 basis points to around 2.46%. That pushed the yield above the equivalent swap rate for the first time since at least 2007 — a sign that investors are getting increasingly anxious about debt sales.
The DAX index was up 1% in early trading, outpacing a 0.2% gain on the broader Stoxx Europe 600 index. German bellwethers including RWE, Bayer, SAP and Porsche were among the top gainers.
Scholz’s announcement, which deprived him of a parliamentary majority, came as a shock even though tensions over economic and finance policy had been building in the ruling alliance for weeks.
It’s a highly unusual move and represents a major risk for the 66-year-old. The last time his party moved to bring an election forward, in 2005, it led to Angela Merkel’s victory and her 16-year grip on the chancellery.
Scholz wants to delay a confidence vote that would trigger a new election until January to give the government time to pass bills on reducing the tax burden on workers and on measures to help German manufacturers.
What Bloomberg Economics Says...
“Germany’s political turmoil, together with Trump’s US election victory, will add to the already very high economic policy uncertainty in the near term. This may prompt businesses to further postpone investment decisions and weigh further on the modest recovery we forecast in the coming quarters.”
—Martin Ademmer, economist. For full note, click here
On top of that, the 2025 federal budget, which is currently going through parliament, needs to be approved by the end of the year.
Scholz’s economic adviser Joerg Kukies will replace Lindner as finance minister, according to a government official, who asked not to be identified discussing confidential planning.
Kukies served as one of Scholz’s deputies when the chancellor was finance minister under Angela Merkel in the previous government and is a former co-head of Goldman Sachs Germany.
According to the constitution, the opposition can only succeed with a vote of no-confidence if it elects a new chancellor at the same time. So Merz would need enough votes for a majority in the lower house of parliament which he is currently lacking.
However, if Scholz hopes to get approval for any legislation while he remains in office he will almost certainly need the backing of CDU/CSU lawmakers in the Bundestag.
German chancellors don’t have the power to call an early election, which lies with the federal president, but they can try to trigger one by deliberately losing a confidence vote.
Once Scholz fails to garner a majority, he can ask President Frank-Walter Steinmeier, a former Social Democrat vice chancellor, to step in and dissolve parliament. The election would then have to be held within 60 days.
Steinmeier said Thursday that he’s prepared to consider dissolving the Bundestag if asked and highlighted that Germany “needs stable majorities and a government capable of taking action.”
“Many people in our country are worried about the uncertain political situation in our own country, in Europe, in the world, after the elections in the USA,” he told reporters. “This is not the time for tactics and skirmishes. It is a time for reason and responsibility.”
Merz’s center-right alliance — which includes the CDU’s Bavarian sister-party — is leading in opinion polls with more than 30% of the vote and would be in prime position to win an early ballot, restoring it to power after it lost to Scholz’s SPD three years ago.
If Merz were to succeed Scholz, his government would be welcomed by many in Europe as he’s seen as bolder than the current chancellor on issues including backing for Ukraine and standing up to China.
At the same time, his alliance fiercely opposes additional joint European Union debt and is committed to strict rules on new borrowing enshrined in Germany’s constitution.
Scholz’s SPD is at about 16% in third place, behind the far-right Alternative for Germany in second with around 17%. The Greens are at about 11% in fourth, while a new far-left party — the Alliance Sahra Wagenknecht — is fifth with roughly 8%.
The FDP is currently polling as low as 3%, down from 11.5% in the 2021 national vote, putting it in danger of missing the 5% threshold for getting into parliament.
A flash poll for public broadcaster ARD published Wednesday showed that a majority wants an early election, with 53% in favor and 40% against.
Only 14% of those surveyed said they’re satisfied with the government’s performance, with 85% saying they’re unhappy with Scholz and his cabinet.
Peter Adrian, the president of Germany’s DIHK industry lobby, said the breakup of the coalition had made the economic situation even more uncertain and companies urgently need an improvement in conditions for investment and growth.
“We therefore hope for a short transition phase,” Adrian said in an emailed statement. “Because in times of multiple challenges in Germany, Europe and the world, only an effective government with a majority in parliament can make the necessary decisions.
--With assistance from Christoph Rauwald, Angela Cullen, Michael Nienaber, Kamil Kowalcze, Blaise Robinson, Rachel Evans, Karin Matussek and Laura Malsch.
(Updates with Lindner backing Merz in fifth paragraph.)
Most Read from Bloomberg Businessweek
What Looked Like a Toss-Up Turned Into a Red Wave. Did Pollsters Get It Wrong?
Even Some High-Income Americans Can’t Afford New Cars Anymore
©2024 Bloomberg L.P.
