Germany – The Fall of the Traffic Light Coalition and its Implications

German Chancellor Olaf Scholz’s coalition has collapsed. Finance Minister Christian Lindner was sacked. The previously multicoloured traffic light is now flashing red. The union between the Social Democratic Party (SPD), Lindner’s Free Democratic Party (FDP) and the Greens has become history.

But what does this mean for Germany? How might the country’s political landscape recover? What role does the right-wing opposition play? Viewing from afar, the underlying implications for current affairs, catalysed by a historic political instability in Europe´s largest economy, should not be underestimated.

Trump’s re-election in the US has been the subject of much discussion in recent times. However, a republican return across the Atlantic is not to overshadow the major political developments in Europe. Despite many hoping that Trump’s return to the presidency would serve as a unifying event for the fragmented German political scene, the country's government fell apart just hours after the republican victory, as Olaf Scholz sacked his finance minister Christian Lindner of the liberal Free Democrats party.

How did it come so far?
It has been months of wrangling over budget policy and Germany’s economic direction, with the government’s popularity sinking and far-right and far-left forces surging. Though the past three years have been shaped by inter-party disagreements, the final straw has been said to be identified as the minister’s recent paper outlining proposals for “an economic turnaround with partly fundamental revision of key political decisions.” This has led Scholz to claim that Linder has “broken my trust too often”, accusing him of putting his interests of the short-term survival of his party forward over the needs of the country. Going so far as to add that “this kind of selfishness [demonstrated by Linder] is utterly incomprehensible.” Consequently, two other FDP ministers of justice and education have voluntarily left the government, with the third minister for transport opting to leave his party to remain.

Paving the way to new elections
Having had a historic lesson in political chaos unfolding in the downfall of democracy, the German constitution – unlike in the 1930s, Article 48 of the Weimar constitution – does not permit the ousting of the chancellor during times of political instability. This is unless the opposition can demonstrate a clear majority in support of an alternative leader.

Since the latter is not (yet) the case, Scholz now leads a minority government consisting of his party and the Greens. Advocating for a vote of confidence to be held in the Bundestag in mid-January. In the highly likely possibility of an SPD loss, Germans would cast their votes in a snap election before the actual September 2025 election.

Consequences on Germany and the rise of extremist politics
Germany has witnessed a disturbingly rapid rise in extremist parties, leading to an increasingly fragmented German political landscape. Especially with the success of the anti-immigrant and Eurosceptic Alternative for Germany (AfD). Which, for the first time since the Second World War, has as a far-right party won the most seats in a German state parliament Thuringia. AfD leader Alice Weidel has deemed the coalition’s collapse a “liberation”. A political event like this collapse is very likely to fuel growing frustration with Germany´s mainstream parties to the benefit of younger populist movements.

Yet, parties across the spectrum have demonstrated an unwillingness to form a coalition with the AfD. Nonetheless, the historic significance of snap elections should not be underestimated. Held almost 20 years ago in 2005, allowing Chancellor Angela Merkel to remain in power, the nature of German politics until now has been traditionally stable.  This cannot be said to be the case today. Disagreements within the traffic light coalition on fundamental issues, including economic reforms, have left the country paralysed across a variety of issues, and it will be months until a new stable government is brought in. Consequences of trust issues of the public in their government and a further lean towards promises of far right or far left-wing parties may be a possibility in Germany’s future.

Europe's vulnerability
     I. Politically
The leader of Germany’s opposition Christian Democratic Union (CDU), Friedrich Merz, has put the claim forward that Europe needed to show strength during Trump’s second term as US president, arguing that the president is only impressed by strength, even opposition.

In a similar trend, EU policy expert Dr Thu Nguyen argues that the German breakup was bound to happen, yet amongst her major concerns lay with leaders such as Viktor Orban and Giorgia Meloni, who could “push a vision of the European Union that is maybe more pro-Russian, or less green, or even harder on migration because they will feel empowered by the results of the US election.” The fundamental risk is that with these major political events clashing – ideologically and simultaneously – Europe may splinter even further. We are witnessing a lack of functioning government in Germany, a weak French president and government, and simply a lack of leadership.

     II. Economically
Titled the “triple shock”, Europe’s economy, not normally known for its dynamism, today is looking stagnant by any standard. Haunted by the energy shock following Russia’s invasion of Ukraine in 2022, the EU economy has grown by only 4% this decade, with actors like Britain not having grown at all. Additionally, Europe’s manufacturers are facing cheap imports from China, which could increase social and industrial strife. Now, Trump is starting his engines to impose his immense tariffs on Europe’s exports.

Tying this economic context to Germany’s fall is alarming. Known for being the economic heart of Europe – it accounts for almost a quarter of the EU’s GDP – the current German political chaos, adding to the country’s staggering struggles with the Russian energy embargo, could trigger a domino effect that topples governments across the continent.

Final remarks
The fall of Germany’s coalition government has exposed deep cracks in a system stretched to its limits. Germany, now named “The sick man of Europe”, is yet to make its call on who will lead its government after elections. When these will be held is undecided, depending on the result of the upcoming vote of confidence. For now, the collapse of the traffic light coalition serves as a reminder of the end of an era in European politics.

By Estella Neumayr