LDN - Business

Germany's Scholz fires his finance minister as his coalition collapses

[November 07, 2024] By KIRSTEN GRIESHABER

BERLIN (AP) — Germany’s center-left Chancellor Olaf Scholz announced Wednesday he was firing Finance Minister Christian Lindner, signaling the collapse of the ruling three-party coalition that relied on Lindner’s pro-business party.

Scholz announced the move at a news conference following weeks of disputes among the coalition partners over ways to boost the country's ailing economy. He said he would seek a vote of confidence in January that he said might lead to early elections that otherwise would be due next September.

“I feel compelled to take this step to prevent damage to our country. We need an effective government that has the strength to make the necessary decisions for our country," Scholz said.

Lindner, from the pro-business Free Democrats, had rejected tax increases or changes to Germany’s strict self-imposed limits on running up debt. Scholz’s Social Democrats and the environmental Greens, who are also part of the coalition, wanted to see massive state investment and rejected the Free Democrats' proposals to cut welfare programs.

Lindner responded to his dismissal by accusing Scholz of failing "to recognize the need for a new economic awakening in our country. He has played down the economic concerns of the citizens.”

He said the chancellor's proposals to reenergize the economy were “dull, unambitious and make no contribution to overcoming the fundamental weakness of our country’s growth.”

Scholz said about Lindner that “he has broken my trust too often. He even unilaterally canceled the agreement on the budget. After we had already agreed on it in long negotiations. There is no basis of trust for further cooperation. Serious government work is not possible like this.”

He accused Lindner of publicly calling for a fundamentally different economic policy, including what Scholz said would be tax cuts worth billions for a few top earners while at the same time cutting pensions for all pensioners. “That is not decent,” Scholz said.

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Federal Minister of Finance Christian Lindner makes a press statement following his dismissal by the Federal Chancellor in Berlin, Wednesday Nov. 6, 2024. (Kay Nietfeld/dpa via AP)

Scholz said he would seek the vote of confidence in Germany's Bundestag, or parliament, on Jan. 15, which would "allow the members of the Bundestag to decide whether to clear the way for early elections.” The election could then “take place by the end of March at the latest, in compliance with the deadlines set out in constitution," he said.

The regular election is scheduled for September 2025.

Germany’s economy is expected to shrink in 2024 for the second year in a row, or at best stagnate, battered by external shocks and home-grown problems including red tape and a shortage of skilled labor.

Scholz’s center-left Social Democrats, Vice Chancellor Robert Habeck’s environmentalist, left-leaning Greens and Lindner’s pro-business Free Democrats — a party that in recent decades has mostly allied with conservatives — set out in 2021 to form an ambitious, progressive coalition straddling ideological divisions that would modernize Germany.

The government can point to achievements: preventing an energy crunch after Russia cut off its gas supplies to Germany, initiating the modernization of the military and a series of social reforms. But the impression it has left with many Germans is of deepening dysfunction.

Ahead of the vote of confidence in January, Scholz said he would reach out to opposition leader Friedrich Merz of the center-right Christian Democrats to confer on possible ways of strengthening the economy and defense.

“I will now very quickly seek talks with the leader of the opposition,” Scholz said. He said he wants to offer Merz the possibility of working together on issues “that are crucial for our country, on quickly strengthening our economy and our defense."

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