Crisis talks in the coalition of Scholz’s Social Democratic Party, the Greens and Lindner’s Free Democratic Party came to a head after the FDP issued a paper with demands for liberal economic reforms that were difficult for the other two parties to accept.
Lindner’s recent policy paper, leaked to the media last week, called for tax cuts and a scaling back of climate policies in order to stimulate economic growth — both positions that put the party at odds with his coalition partners.
Central to the coalition disagreements was the adoption of the 2025 budget by parliament — in which a gap of at least €2.4 billion, and potentially far more, needs to be filled — as well as an agreement on measures to revamp the country’s ailing economy.
Trump’s victory is expected to put heavy pressure on Europe’s largest economy. An analysis from the German Economic Institute (IW) estimates that a new trade war could cost Germany €180 billion over Trump’s four years in office.
Many in Germany had hoped that the victory of Donald Trump in the U.S. election earlier in the day would force the coalition to hold together over fears that the incoming president would give Europe’s biggest economy a hard ride — targeting its all-important car industry in a trade war.
Ultimately, however, not even the looming threat of Trump proved enough for the fractious parties to put aside their differences.
This story is being updated.
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