German coalition collapses as Chancellor Olaf Scholz announces confidence vote

Germany’s centre-left Chancellor Olaf Scholz has announced that he will seek a confidence vote in January and he is firing Finance Minister Christian Lindner, in a move which could risk undermining his ruling three-party coalition.

The coalition currently in power relies on Lindner’s pro-business party, the Free Democrats, for its ability to rule, and it was not immediately clear if the Free Democrats would leave the government coalition in reaction to the announcement.

“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 on Wednesday.

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Scholz said Lindner "has broken my trust too often".

"He even unilaterally cancelled 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," the chancellor added.

Scholz’s Social Democrats and the environmental Greens, who are also part of the coalition, want to see massive state investment and rejected the Free Democrats' proposals to cut welfare programmes.

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

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